Resorts En Vogue: A Study Of Trends Jones Lang LaSalle Hotels

By Arthur Buser

Consumer trends in holiday getaways are constantly evolving. Identifying customer preferences can present opportunities for resort operators to capture more of a guest's vacation spending while providing better service. Through creative cross-marketing, off-season marketing and by offering a myriad of amenities, resort operators are maximizing guest expenditures to attain a greater portion of the almost US$30 billion luxury hospitality industry. Arthur Buser reviews the latest trends in resort offerings and guest desires, identifying how management can capitalize on the "en vogue" to the benefit of their bottom line.

Today, people are more focused on health and longevity, which has generated a major shift in resort preferences to the health and wellness getaway. Four to five years ago, resort pools and beaches were spotted with sun worshippers. After a day of tanning, a massage or spa treatment was not only unappealing, but potentially painful. Due to the heightened awareness of skin cancer, people are opting not to lie in the sun for extended hours. Adding to that, the fact that people feel they have less time to relax means that rejuvenating spa treatments are high on a traveler's priority list.

From a resort operator's perspective, spas are not just an amenity, but also a potential source for considerable profits. According to PKF Consulting, spa department profits grew a very strong 51.3% from 1998 to 1999 in USA. Additionally, some high-end spas generate revenues of US$30-40 per occupied room.

There is a focus on adding little touches to resort rooms that are special, luxurious and convenient. Preferences in in-room and recreational amenities are changing. Lavish types of bath products, bed sheets, threaded towels, web access to T.V., outdoor/indoor showers, five fixture baths, night lights, reading lights, special seating areas are becoming commonplace in resort rooms. Regarding recreational amenities, many resorts offer lessons in golf, sailing, snorkeling, surfing, and scuba diving. Today, guests prefer a huge menu of opportunities to experience at their leisure.

Resorts have responded to the overall heightened sensitivity to environmental concerns by implementing eco-based tourism, another untraditional revenue source. Eco-tourism is defined as "travel to enjoy and appreciate nature" and is one of the fastest growing segments of the travel industry.

Since 1990, while tourism overall has been growing at an annual rate of 4%, nature-based travel has been increasing at an annual rate of 10% to 30% (World Resources Institute). Based on profiles collected by The Ecotourism Society (TES) eco-tourists are willing to spend more on their travels than general tourists.

Some examples of eco-tours include hiking among active volcanoes in Hawaii, Australian bush and rainforest tours and learning about indigenous tribes of Papua New Guinea. Eco-tourism is likely to generate increased revenue for resorts as they further embrace the trend in coming years.

Senior citizens have become a niche market by their ability to travel during non-peak months, thus increasing ADR during the off-peak season. Today's seniors are very active and are viewed as a market to fill value periods. For example, a market that typically runs an ADR of $400 to $600 during peak season might run at $200 to $300 during off-peak season. By successfully marketing to the retiree niche market, resorts may be able to raise their ADR as seasonality becomes less of a factor.

By increasing the variety of amenities, activities and entertainment, resort owners are giving travelers more reasons to make "mini-getaways" out of business and meeting destination travel. If a businessperson staying at the resort brings along a spouse who will play golf or take advantage of the spa service, a resort is capturing greater revenue and increasing the likelihood that the travelers will lengthen their stay through the weekend.

Resort owners have identified a wealthy segment of the population desiring a luxury resort holiday for the whole family. While some resorts are perceived as adult only and others as family only, the trend for the best resorts is to attract both markets. The Four Seasons Maui Wailea has implemented children's vacations with their "Kids for all Seasons" program. This includes "kids only" pools and activities apart from areas designated for adults who do not necessarily want to mingle with children. They also have a complete menu of necessities for families traveling with babies such as strollers, strollers made for jogging, changing tables, and diapers for swimming.

Increasingly, hotel companies are implementing cross-marketing strategies by affiliating with a non-hospitality brand. For example, Marriott International recently announced a joint venture with contemporary Italian jeweler Bulgari. By creating a luxury product along with the Bulgari name, Marriott is leveraging Bulgari's strong in-place brand recognition and loyal customer base. The Bulgari affiliation gives guests a sense of the hotel's atmosphere and level of customer service. Bulgari clients expect luxurious, contemporary Italian design - therefore, hotels resulting from the joint Bulgari and Marriott brand will offer the finest Italian cuisine, amenities and furnishings available. This trend is likely to continue.

While some resorts remain "business unfriendly" without telephones, fax machines or cell phone reception, there is a solid trend toward creating business-enabled resorts. Although most guests travel to a resort to relax, many prefer to stay "plugged in" while on holiday. Guests are uncomfortable being sequestered from all communication with the office. As a result, a great number of resorts have implemented wireless web access, business centers and rooms with printers, fax machines and two phone lines. Today, more resorts permit a traveler to accomplish a bit of work without impacting the family's experience.

Another trend we are witnessing today is that repeat visitors to resort destinations are opting to invest in timeshare properties. According to the American Resort Development Association (ARDA), vacation ownership is the fastest growing segment of the U.S. travel and tourism industry with an average growth rate of approximately 16% per annum since 1993. In a 1999 ARDA report, current timeshare owners cited the high quality standards of accommodations and service at the resorts at which they own and exchange, followed by the flexibility offered through the vacation exchange opportunities and the cost effectiveness of vacation ownership as their reasons for timeshare purchase.

Most major brands have a vocational ownership component such as Starwood Vacation Ownership, Hyatt Vacation Ownership, Marriott Vacation Club International, Four Seasons Residential Properties and Cendant's Resort Condominiums International. Major European players such as Bass and Sol Melia are reportedly seeking for ways to enter the timeshare business, while in the Asia Pacific, the Accor Premiere Vacation Club (Australia) has reached A$3 million in subscriptions in just three months.

In 2001, it is estimated that 500,000 U.S. couples will plan a destination wedding. Many are lured to exotic resort ceremonies held next to an ocean, lagoon or on a hilltop. Currently, many resorts offer a variety of wedding packages that range in price. The Plantation Island Resort in Fiji allows couples to rent traditional wedding costumes made of tapa cloth while they are married to the beat of Fijian warrior drums. In the past, resorts typically generated income during the honeymoon portion of a wedding; however, these specially designed wedding packages provide the opportunity to capture revenue from catering, music, photography as well as room revenue from wedding guests. This is another trend that is anticipated to grow in coming years.

Resort owners have learnt to market during the off-season to build occupancy. This also enables them to staff evenly throughout the year - which is always a challenge of the seasonal resort. To achieve this, many resorts offer package getaways during the off-season. For example, the Aspen Club Lodge ski resort offers a spa package for US$173 per person during April and May (as compared to the US$960, one-bedroom suite rate offered in December). Also, there was a time when the high-end, desert resorts closed during the summer time due to the extreme heat. These desert resort owners discovered that people who couldn't necessarily afford to stay at their resorts during peak season would do so during summertime. Therefore, we are seeing more resorts becoming ten-month markets as opposed to four- or five-month markets.

The traditional two-week summer vacation is on the decline for today's travelers. This is due to the job complications of two-income families, limited time budgets, year-round schools, interest in more specialised recreational experiences and increased mixing of personal and business travel. Additionally, with the uncertainty of the economy and less available time for holidays, fewer guests plan trips six to 12 months in advance. Today, many rooms are booked during the month of travel.

In the past, wholesalers booked a great number of travel packages and were middlemen with whom hotels had to negotiate. Now travelers are researching and arranging every aspect of their holiday via the internet thereby reducing the role of the wholesaler and to some extent, the travel agent. According to the Travel Industry Association of America (TIA), online travel bookings jumped from US$91l million in 1997 and to US$2.2 billion in 1998. By 2003, they're expected to reach between US$16 and US$17 billion by 2003.

As a result of this trend, many hotels offer a variety of packages on their websites. Hotel owners are looking to replace the wholesaler by packaging together a bundle of amenities such as spa packages, golf packages, car packages, breakfast packages and romance packages.

Today's customers are willing to spend more for vacations while their tastes evolve toward wellness, eco-tourism, personalized service, "mini vacations" and business-enabled travel. Resort operators who creatively respond to these trends by offering every possible amenity and providing the best experience in the most convenient manner will flourish.

Arthur Buser, Executive Vice President
Arthur is head of the firm's West Coast Division. His primary areas of responsibility include hotel asset management and hotel equity and debt marketing. Most recently, Art led the sale of the Radisson Agoura, the Holiday Inn Anaheim at the Park and the Hotel Nikko at Beverly Hills.