First, it's an old story, but stop thinking that lowering your rates will sell more rooms and increase room revenue. It may sell a few more rooms, but it rarely sells enough rooms to offset revenue lost due to lowered rates. It’s simple economics; lower rates have not ever, nor, will ever, create room demand. Travelers do not buy rate; they buy value. Don't reduce rates, add value.
It’s no secret that the hospitality industry has faced unprecedented challenges in recent months. A just-released year-to-year comparative report by Smith Travel Research (STR) cited the following statistics: Hotel occupancy was down six percent to end the week at 52.6 percent. Average daily rate (ADR) dropped 9.9 percent to finish the week at $95.86. Revenue per available room (RevPAR) decreased 15.7 percent to finish at $50.47. Furthermore, a recent Maritz telephone survey of 1,000 Americans indicated holiday travel is projected to experience its first significant decline in a decade, accounting for a reduction of $4.05 billion of travel revenue. The decline was attributed to a combination of financial concerns and fears surrounding the H1N1 virus.
Like a gladiator returning from combat, the U.S. hotel industry has come face-to-face with a number of considerable challenges this year: dismal demand, plunging rates and lack of financing to name a few. Yet while murmurs of recovery have begun to echo from the masses, the fight is far from over. Jim Abrahamson, president of the Americas for InterContinental Hotels Group, made this clear when discussing debt, which he called the “single most significant crisis that’s going to face us this year” during a panel at the AH&LA’s Hospitality Leadership Forum this week in New York.
After any natural disaster, it’s important to check in with affected parties to survey the damage. The same is true for an industry battered under a deluge of economic recession. During the Hospitality Leadership Forum held Saturday at New York’s Javits Center, moderator John Russell of NYLO Hotels asked for status reports from leaders of three major hotel companies during a CEO leadership panel. Their answers were heavy on challenges, but showed a resiliency and optimism that reflect the green shoots that have begun to sprout up throughout the industry
Over the past 18 months, one of the many casualties of cost cutting, downsizing, and elimination in the hotel industry, has been the commitment to comprehensive, strategic, creative, and proactive public relations communication. Much of the public relations activity in recent months has been reactive or related to dealing with the many perils and fallout of a struggling industry. Reduced travel, spiraling rates, image adjustments tied to consumer perception anxiety, crisis management with defaults, receivership, and trying to stay one step ahead of the next wave of bad news.
The Choice Hotels-Expedia brouhaha of recent weeks has shined a scorching spotlight on the fickle relationship between hotel companies and online travel agencies. Call it the industry’s version of a celebrity breakup scandal. But while the focus of debate has centered on last-room availability and other contractual terms surrounding room bookings, there’s a fundamental component of this precarious affiliation that’s gone largely ignored: visibility.
Establishing the value of a hotel in today’s economy is a little like playing darts blindfolded at the local pub—you know the general direction to throw but no one is certain exactly where the dart will stick. Speakers at last week’s ninth annual Fishing for Solutions: Servicing Hotel Loans conference in suburban Dallas reached a general consensus that it’s good to be skeptical if anyone tries to put an absolute value on a hotel. The hip term is “price discovery”—but speakers agreed no matter what it’s called, it must be determined before a significant recovery can occur.
My last two columns have addressed the evaluation and measuring performance process for hotel staff and I appreciate reader comments, questions and the opportunity to support hospitality and hotel companies. Those reader questions and inquiries caused me to reflect on the need to complete or “close” the circle of evaluation, which is providing useful and meaningful feedback to senior management.
In 2007, a traveler wrote the following review of Opus Hotel Vancouver on TripAdvisor: “The GM who thought he was Ian Fleming was a real detriment to a great trip. Shame -- let’s hope the hotel sees sense and releases Daniel to make another movie.” Ouch. The comment was a reference to my James Bond namesake and my secondary career as a mystery novelist, but nonetheless I was baffled by it, having no recollection of any guest encounter that would have provoked a public cry for my dismissal.
Adding hotels to the existing construction pipeline isn’t likely to for another year, and when such building activity revives, it’ll more often happen in the limited-service and economy segments, said North American developers, construction specialists and consultants. At the same time, opportunities for new-builds in the US$3-million-to-US$10-million range are available, particularly if you follow the interstate highway system, as Holiday Inn founder Kemmons Wilson did in the 1950s and Wilson disciple John Q. Hammons of Hammons Hotels does now.
Much has been written and discussed about the restrictions placed on physicians attending pharmaceutical and other life-science industry corporation training and educational programs, in particular, at high-end resorts throughout North America. It’s no wonder then that many resort operators have limited drastically or even abandoned altogether pursing this lucrative and highly coveted business.
We suspect that 2010 will show some signs of recovery mixed with continued hardship for many hotels. We all know what happens when revenue levels are constricted; fewer dollars in, fewer dollars to spend. At this point, careful consideration should be made for every dollar spent to develop business.
Choice Hotels International and Expedia are at the bargaining table looking to hammer out an agreement that would get the room inventories at Choice’s more than 5,000 hotels listed again on the Web sites that Expedia operates. Those Web sites, including Expedia.com and Hotels.com, have not had Choice properties listed in their inventories for about two weeks. In a previously released statement, Expedia said it pulled Choice hotels from its site because of the inability to reach a new agreement after numerous extensions.
So, have you heard about balloon boy? Of course you have. You probably heard about it from at least three different sources, all within 30 minutes of that papier-maché and tinfoil contraption breaking free. I'm also guessing that you know what your high school classmate – who you haven't spoken to in 15 years - ate for breakfast while delayed at the Cincinnati Airport. (Maybe it was O'Hare. You get the idea.) Between 24-hour cable news, Twitter, Facebook, various iPhone Apps, Foursquare, FriendFeed and the myriad of other information channels, we are all on information overload. This state of being has allowed us increased awareness of the world around us (think the Mumbai hotel bombings and the Iran election riots) and kept us abreast of important news items, but often this information comes at us so fast that it can lead to rash opinions, speculation, misinformation and - simply put - noise.
Seven “fiercely independent” resorts, each a brand name on its own, have banded together to form Kindred Resorts & Hotels, a group whose aim is to provide a cohesive voice for independent properties like themselves and to tell the story of what these kinds of resorts represent, according to Gregory Riehle, executive VP of Saddlebrook Holdings. The Kindred slogan is: “Authentic in Spirit, Distinctive in Style.”
Struggling to silence pesky naysayers who still doubt the importance of travel in jumpstarting the sluggish U.S. economy? Here’s a number to add to your ammo clip: US$772.9 billion. That’s the amount spent by domestic and international travelers in the U.S. in 2008.
During the current U.S. hotel downturn, it has been painfully clear that the suffering has been shared by properties in each and every chain-scale segment of the industry. Whether you look at the high-end luxury segment or the opposite end of the spectrum in the economy segment, you see occupancy declines of anywhere from 9 percent to 12 percent. However, not all occupancy declines are created equal.
Steve Bollenbach’s dream has been realized. Bollenbach, the financial whiz who led Hilton Hotels Corporation’s growth explosion that was exemplified by the merger with Promus Hotels Corporation on the final day of 1999, envisioned a worldwide Hilton that melded HHC with Hilton International. That vision became reality last month when the company announced its new corporate name and logo. Hilton Worldwide, as the McLean, Virginia-based company now is known, is among the world’s largest hotel companies with more than 3,400 owned, managed, licensed or franchised hotels in its portfolio.
I just got through reading an article titled "Growing Tension Between Hoteliers and OTA's". There are so many of things in this article with which I don't agree, I don't know where to begin. Either the author is attempting to sidle-up to Choice Hotels or he just doesn't get it. I won't go through every detail here; I would need to write a mini-novel. Let's just say I would urge other hotels to consider some facts before acquiescing to the article's implications.
Remember in “the good old days” when “all” we had to worry about from a negative guest was that they would tell their family, friends, and co-workers? Most seasoned hoteliers will recall being told in training classes that “a happy guest tells five others; an unhappy guest tells 9-10 others.” It seems like not that long ago I was facilitating workshops where, based on these numbers, we tried to quantify the significant cost of future business that was lost through negative word-of-month advertising, and even then it easily justified an investment in hotel hospitality training.