My Loyalty traveler advice is to use online travel agencies (OTAs) for hotel rate comparisons, but always go to the hotel chain’s own websites for booking your hotel stay.  After you have narrowed your hotel selection down based on rates displayed on sites like Expedia, Kayak, and Orbitz, then search the hotel chain’s website for even lower rates. This will often reveal a better rate. Remember to check group rates like AAA and senior discounts which are not shown on the results of an OTA search.

Also, special offer rates through the individual hotel’s website many times will provide an even lower rate than AAA for your dates.

HotelMarketing.com posted an article showing OTAs make the majority of their revenue from hotel industry fees and commissions. Expedia made 60% of its 2008 revenue from hotel bookings compared to just 15% from airline bookings.

The case study shown in the cited article reveals Expedia had a 25% mark-up for hotel fee/commission on a $550 New York 2-night hotel stay. Basically the hotel is paying Expedia quite a chunk of change, $137.50, for a $550 booking.

The deep discounts available on special offer rates through the hotel’s own website are possible because the inventory off-loaded to OTAs is at a substantial discount to the hotel’s own listed rates.

In this case study the $550 booking for a New York hotel shown on Expedia is only generating $412.50 for the hotel while generating $137.50 in revenue for Expedia. This is equivalent to a nightly rate of $206.25 for the hotel.

What does this mean for the hotel guest?

The chances are fairly high that a potential guest looking for rates on the hotel’s own website will find a lower rate somewhere between the $275 shown on Expedia and the $206.25 the hotel has contracted with Expedia to sell the room. A $240 per night rate is a $35 savings for the hotel guest and generates an additional $33.75 for the hotel.

What do you do when you go to the hotel’s own website and you see a $275 rate just like seen on Expedia?

Advice: Go to the hotel’s website and look for AAA rates and special offer rates. You should be able to drop the $275 rate by 10 to 20% with a group discount like AAA or AARP or a hotel special offer rate.

The hotel is giving up 25% of its revenue to sell a room through an OTA, whereas the cost is only a few dollars to sell through its own website. This is the reason hotels require frequent guest members to book through hotel chain branded websites to earn loyalty program benefits. And this is the reason hotel loyalty program benefits can be generous.

A free breakfast, some hotel loyalty points, and a $50 room upgrade make the frequent guest a happy guest and may still bring in more revenue to the hotel than the guest on an OTA booking.

Loyalty travelers are generally happier travelers when it comes to getting good value on hotel bookings.

 

Loyalty Traveler Case Study: Hotel Rates Comparison between OTAs and Hotel Branded Websites

Chicago, Illinois

Friday night, August 14, 2009

 

Hotel	OTA rate (Orbitz)	Hotel website lowest rate found (AAA rate for all samples  )	Savings with Hotel direct booking
Hilton Palmer House	$134.10 double bed, smaller room	$119 AAA Stay and Save	$15.10
Hilton Palmer House	$161.10 King	$143 AAA	$18.10
W Chicago	$199 King	$159.20 AAA	$39.80
InterContinental Chicago	$197.10 (standard)	$186.15 AAA	$9.95
Hyatt Regency Chicago	$189 (King)	$151.20 AAA	$37.80

 

Remember three facts about Online Travel Agency Rates:

1.      OTAs do not display AAA rates which are typically the lowest rate about 50% of the time.

2.      OTAs charge a small fee of $1 to $5 per hotel booking that is disguised in the additional Tax and Fees rate charged by the OTA for the booking.

3.      OTA bookings do not qualify for frequent guest benefits in most cases. Points and benefits earned from a hotel stay booked through the hotel chain’s own website can be a $50 to $100+ value.

 

The Hyatt Regency Chicago could earn 2,000 Gold Passport points using a G2 booking bonus and earn 2,500 points per stay with the current Gold Passport promotion. Along with base points earned, the frequent guest would earn over 5,000 points for this one night stay at the Hyatt Regency Chicago. 5,000 points is sufficient for a free night at a Category 1 hotel. That is a lot of added-value to forego on an OTA booking.

The question from Kelley perked up my attention. “What if the  4^th of July holiday turns out to be a total bust for hotels?”

I talk to her about hotel travel frequently – more than she wants to hear. And Kelley was throwing a conversation starter at me yesterday as we drove to Santa Clara, California – 80 miles from Monterey – for the 21^st weekday in a row to the Cancer Treatment Center of Kaiser Hospital. The best part of three hours a day driving together in the car is the opportunity to talk our heads off.

This is the year without a summer vacation for us and it seems like many others are going through similar travel droughts, although likely for other reasons.

We spend significant hours on the freeways. From our house we drive downhill to Highway 1 for 20 miles around Monterey Bay to Highway 156 (5 miles) to Highway 101 for 40 miles, to Highway 85 along the south end of San Jose (3 miles) to Highway 87 (5 miles) into downtown San Jose, then head west on Interstate 280 for 5 miles, and we are in Santa Clara and the Kaiser hospital.

My primary point about our extensive daily freeway travel is we just are not seeing travelers in cars loaded with suitcases and gear for a summer trip. Normally these roads are packed with RVs, trucks with boat trailers, and cars with loaded bike racks.

Where are the travelers this summer?

And Kelley asked, “What if the 4^th of July holiday is a bust for hotels?”

San Francisco Hotel Rates slashed to new lows 48 hours before the 4^th of July weekend

Last night I checked hotel rates for the San Francisco Bay Area and the rates dropped significantly on Wednesday, July 1 from the rates I surveyed 24 hours earlier on Tuesday, June 30.

Rate changes are not that unusual, however, I have followed the hotel rates in San Francisco since late April when Starwood and InterContinental Hotels Group announced their free hotel night promotions. Several hotels in San Francisco dropped rates yesterday to the lowest rates I’ve seen since beginning my data collection for the July 4 weekend on April 30.

I predict this is going to be a bad 4^th of July holiday season for hotels in the USA.

 

San Francisco Starwood Hotel Rates Comparative Observations

July 3-5 weekend	April 30	May 19	June 30 check	July 1 Check
Westin Market Street	$149	$139	$119	$99
St. Regis	$295	$359	$295	$295
The Palace Hotel	$199	$229	$199	$135
Westin Verasa Napa	No rooms available	No rooms available	$191	$191
Sheraton Palo Alto	$359	$359	$99	$99
Westin Palo Alto	$409	$409	$129	$129
W Hotel	$174	$169	$191	$191

I filed a couple of Best Rate Guarantee claims for Le Meridien San Francisco based on discrepancies I saw yesterday. $103.35 is quite the deal for the Le Meridien Hotel.

San Francisco Hotel Bargains for July 4 weekend

July 3-5 weekend	July 1 Check
Mandarin Oriental	$199
JW Marriott	$179
Fairmont SF	$179
InterContinental SF	$159
Clift Hotel	$134
Westin St. Francis	$135
Hilton Financial District	$129
Omni San Francisco	$149
Hotel Monaco (Kimpton)	$149

 

How do hotel rates look this July 4^th for your area?

 

 

 July 9 update: Smith Travel Research numbers for the week of July 4 were posted today. The occupancy decline across US hotels was about 6% for the week. Friday, July 3 showed an 8.2% decline in occupancy and 9.4% decline in average daily rate when compared to 2008 data. Saturday, July 4 showed a 4.3% decline in occupancy and a 5.3% decline in average room rate.

I call that a busted holiday weekend.

San Diego was one of the top hotel destinations in the country with a greater than 5% increase in occupancy over last year. I guess those high rates in San Diego last week were really due to a lot of hotel guests, although the occupancy average still came in at just 74.9% for the week.

New York still looks like the rate bargain destination compared to the prevailing rates over the past few years.

Source: http://www.hotelnewsnow.com/articles.aspx?ArticleId=1499

 

 

 

There is so much beauty to behold in this hotel. The St. Francis Hotel in San Francisco is huge. The historic building and the Pacific Tower combined have nearly 1,200 guest rooms and dozens of floors and hallways to wander. The location on Union Square is ideal for a downtown San Francisco location with easy access to cable cars, restaurants, theater district, shops, and city buses.

 

The historic St. Francis Hotel faces Powell Street with one of the city’s few remaining cable car lines. The St. Francis Tower opened in 1971 and is built behind the older hotel. Originally, the hotel opened in March 1904 and only consisted of the two left-most wings. The interior of the hotel burned in the firestorm the days following the Great Earthquake of April 1906. The hotel re-opened in late 1907 and plans were continued to expand the hotel. The right end hotel wing was added in two additions which opened in 1908 and 1913. The 32-floor St. Francis Pacific Tower was constructed between 1969 and 1971.

The St. Francis Hotel is a San Francisco icon. The hotel was financed by the Crocker family of California. Charles Crocker was one of the big four railroad magnates who owned and built the western U.S.  trans-continental railroad in the 1860s. These guys made a lot of money, and today, about two blocks from the St. Francis on ritzy Nob Hill, there is a major hotel named for each of the three other railroad tycoons: Huntington Hotel, Stanford Court (Renaissance Hotel), and The Mark Hopkins (InterContinental Hotel).

Room Rate history:

Westin St. Francis can be $119 one day and $389 the next. Chances are you will find rates available for $119 to $149 many weekends over the next few months. Sunday nights can also be a bargain. Best deals are usually holiday weekends. Weekday rates can be astronomical when a conference is in the city with $300+ rates.

The AAA rate of $107.10 was the best rate I saw for a May 2009 stay. Reports on Priceline show $70 per night bids have been successful in the past month.

Historically this hotel was rarely under $149 night in 2006. I stayed several times in November 2007 when there was a special $100 Meet at the Clock rate. The hotel features an urban legend with the 1907 Clock in the lobby as a long-time meeting point. The hotel added The Clock Bar adjacent to the lobby just this past year.

Rates continued to stay high most of 2008 and then all room rates dropped after the financial collapse in November 2008. The rates in the past six months have had some of the lowest rates in years.

The Lobby and Building:

The lobby of the St. Francis is usually busy with guests and visitors wandering in from Union Square. There are glass cases with historical artifacts from past decades of the hotel. Be sure to see the Ansel Adams display by the Concierge desk showing photographs of the historic St. Francis.

The lobby now holds the Clock Bar, added in 2008, and the Michael Mina restaurant. The Oak Room is the location for morning dining and a wider selection of dinner entrees. The fitness room is down the hallway just past the Oak Room. There is a daily use fee for guests who are not SPG elite members.

There is a popular morning cafe for coffee and pastries in the reception desk area of the lobby near the valet car port.

 The St. Francis Hotel  historical showcases are in this section of the lobby.

Hotel Rooms:

Many guests prefer the Tower rooms due to more uniform size and the view across San Francisco from the higher floors. Kelley and I prefer the traditional rooms in the historic building overlooking Union Square.  The noise from the cable cars can be loud and you hear much more of the street noise when you have the windows open in the old building rooms. The Tower rooms tend to be much quieter, but have no sense of the hotel history felt in the older building. I have been in Tower rooms where the window opened slightly and others with windows that were sealed closed.

The size of the hotel means that you can stay in a variety of locations within the hotel featuring different room layouts, furniture, and views.

A Union Square view places you directly in the heart of downtown San Francisco. Open the window and you feel and hear the city around you.

The views of San Francisco are great from the high Tower rooms. The glass elevators ride the exterior of the building and offer a quick view of the San Francisco skyline.

The rooms on this side of the tower on the upper floors have an excellent view of the city square block Hilton San Francisco. The skyscraper tower of the Hilton Hotel is 46 stories and the Club Lounge on the 45th floor is one of the highest locations in the city. The top floor of the Hilton used to house a restaurant that was just closed in this current financial recession.

Most Tower rooms will face Union Square.

The Tower is 32 floors and the historic building is 12 floors.  The top floor of the Tower is called Victor’s Palace and there are a couple of large rooms with panoramic window views around the city. The top floor is only open for special events.

Most of the time Victor’s Palace on the top floor at 32 is inaccessible to guests.

I photographed these rooms and the view from top floor windows in late 2007.

You need to be at least in the upper half of the Tower for good views. You need to be a few stories above the 12^th floor historic building for unobstructed views toward Union Square. Otherwise your view may consist of the back side of the historic St. Francis building. There are some really undesirable small rooms with no views shown here with interior wing facing views in the historic building. These room types may be your fate if you decide to Priceline or Hotwire this hotel.

Floors above 20 have more open views above most of the other buildings. Floors 25 to 31 are best as windows are unobstructed by most nearby buildings.

The view from rooms on the back side of the St. Francis historic building are really as bad as it looks in the photo. There are too many nice rooms in San Francisco to settle for a brick wall vacation. There are 10 floors of rooms from 3-12 on the backside interior facing walls of the historic hotel and probably over 100 rooms with a brick wall and other room window views.

The lower floors of the Tower building do not have views either. You need to be in the Tower corner room or high enough to see over the 12-story historic building.

The Rooms:

Rooms on the Union Square side of the St. Francis Hotel have ornate cornace to view

There are a variety of room sizes in the historic building and various furniture arrangements. The quality of furnishings tends to be better in the historic wings.

The Tower rooms have more generic styles of furniture.

The beds have always been quite comfortable for my hotel stays.

Westin St. Francis Tower room bed

I have stayed in a Tower corner room where I had to walk 16 feet down one entry hall and make a right turn for another 10 feet to reach the main bedroom. There was the coffee maker, a bench, and art pieces in the hall.

A 10th floor junior suite contained a couch:

Bathrooms tend to feel well designed:

Wandering the halls of the St. Francis also reveals some interesting design elements.

There are beautiful features and detail to observe in the simple elements like lights:

Old stairways have a beautiful symmetry:

Wall art worthy of admiration:

And look above to ceiling detail:

This kind of attention to detail is not apparent in many modern buildings.

The right room and the right eye to hotel detail can make the Westin St. Francis a special hotel experience.

Coach Air Travelers to Pay for Premium-class Excess?

Joe Brancatelli has a great read from the Washington Post on the long term outlook for air travel.  He predicts the economics of premium cabin extreme makeovers these past few years will result in higher economy class fares for the leisure traveler coming soon as the profitable premium-class flyers dwindle.

 

When it comes to hotels the Early Bird gets Hosed

Sarah Nassauer had a piece in the Wall Street Journal March 31, “Travelers find it pays to wait for late deals”.  The article cites data from Travelocity’s senior editor, Genevieve Shaw Brown, indicating hotel guests received average room rates 20% lower within 30 days of travel compared to reservations made more than 60 days before travel.

My observations for San Francisco over the past year show the lowest rates typically occur between 7 and 14 days prior to travel for upscale San Francisco hotels.

 

Cool Hotel Websites

Adam Kirby, associate editor of Hotelsmag.com, had a visually stimulating piece “Web Designers Name Favorite Hotel Sites”.  I liked seeing what designers like in a web site.

I really do intend to put LoyaltyTraveler.com back online this year and I was looking for ideas.  The capital Catch-22 for a small business is you need money to make money. I’ve been in short supply.

 

Europe Hotel Rates Decline but Brits are Still Too Broke

The Telegraph, a British paper had an April 6 article by Charles Starmer-Smith “European Hotels Cut Rates” showing the steep decline in European hotel rates of 10% to 25% since November 2008. The impact of the Sterling’s value dropping 20% against the Euro during the same period means hotel rooms are still more expensive for Brits traveling to the continent.

 

Hawaii Hotel Rates Near Record Decline

USA Today published a piece by Jaymes Song, AP writer, “Hawaii Hotels have worst February in 18 Years”.  Hawaii had its worst hotel room occupancy for February in 18 years since Gulf War # 1. Apparently February is normally the busiest month of the year in Hawaii. Occupancy varies across the islands with Oahu doing the best at 78% and the Big Island Hawaii down to 64%.  Rates were down across the board, but after several years of huge annual increases the hotel rates are still no bargain. The average daily rate is still $187 per night after a 12% decline over the past year. 

Hotels are crying about revenue, but at Hawaii RevPar $140 in this downturn compared to $74 in late 2001, I say that still looks like some impressive growth – something like 10% per year average since 2001. I am not a hotel economist so perhaps the data is worse than it appears to me.

 

Does Priceline help the local economy?

Tom Belden had a piece in the Philadelphia Inquirer, “Winging It: Bad business climate means good hotel rates”. This article cites PKF Hospitality Research saying the decline in hotel profits, about 30% in 2009, will be the greatest one year decline since the 1930s. Interesting that the article mentions hotel stays as a frugal and civic minded way to help your local community. In the end the writer books a $65 Priceline stay at the Sheraton City Center. 

As Loyalty Traveler I advocate local hotel stays as a frugal and civic minded staycation strategy to reach elite status that pays off on the real out-of-town vacations.  But I advocate booking through the hotel’s website.  

Does Priceline help the local economy? I guess so, since the hotel guest will likely spend money at businesses in the vicinity of the hotel.  A direct booking with the hotel probably helps more.

 

Tim Winship  - Commandeering  the campaign for more frequent flier awards, temporarily at least

“Survey finds no improvement in frequent flyer awards” – Tim Winship

548 people have spoken to Smarter Travel and Frequentflier.com. Award tickets to Europe are easier to get these days. 

Apparently the frequent flier programs are lining up the miles for paying customers with all the ongoing double and triple elite miles offers. When it comes time to spend your miles earned from all those flights that made you an Executive-1KChairman-Platinum elite flyer, the airlines are still being stingy.

Tim thinks the airline’s are missing a great opportunity for customer relations by holding back award seat inventory in this economic climate.

 

Kimpton Hotels Had a Birthday and I missed it

Last week was a bad time to miss out on emails. I missed the Kimpton Hotels $81 sale .  The basic deal was $81 per night for a two-night stay at nearly any Kimpton. Reservations were accepted from Thursday April 2 to Sunday, April 6, 3pm Pacific time. By Saturday, April 4, two days into the sale there were few properties left.  There were still some rooms at three or four San Francisco Kimptons when I finally saw the Kimpton sale.  

 

Hilton HHonors announced their HHonors second quarter promotion for 1,000 points per night.

www.hiltonhhonors.com/1000bonuspoints The offer runs from April 13 to June 30 and registration is required.

 

On a Personal Note:

The past two weeks I have seen project deadlines, relative visitors, and the flu – first for K and then for me.

We did work in a stay at the Hyatt Highlands Inn in Carmel and had another wonderful visit in our wannabe home away from home where the mountains meet the sea. The irony was our stay in the Carmel Highlands was the only day with fog for the entire week. 

K started chemotherapy this week for her rectal cancer and I feel like I acquired “chemo brain”.  

Really – it is a published side effect of mental fog for cancer patients (and based on my experience chemo brain is contagious like the flu). Perhaps this week, now that the fog has temporarily lifted, I will get back to writing on hotel loyalty program developments.

Sunset view from Highlands Drive (above Hyatt Highlands Inn), Carmel, California

London average room rate in November 2008 dropped 5.6% to £130 per night from November 2007 rates.

For Americans, that comes out to $200USD per night at today’s exchange rate of $1.54 = £ 1.  That sounds expensive , yet compared to November 2007 when the average room rate was over £137 per night and the exchange rate was $2.02 = £ 1, the average room rate has dropped from $277 per night to  $200US.  That is nearly a 30% reduction in room rates for the American tourist in one year. 

 

The Euro has also gained in value from 1.40€ per £ 1 in December 2007 to just 1.10 € per £ 1 currently.  The reduction in price of UK hotels by 20 to 30% for Europeans and Americans still has not generated increased tourism.

 

UK Hotel Occupancy Declines from November 2007 to November 2008

London    - 6%  to 79.5% occupancy in November 2008

 

I think the hotel consumer needs to keep in mind while reading all the doom and gloom hotel news in late 2008 that 2007 was a peak in hotel room rates.  London hotels made record profits in 2007 and occupancy was at its highest in ten years since 1997.

 

The fact that airfare is a bargain during this final quarter of 2008, hotels in London and the UK cost 20 to 30% less than a year ago for millions of tourists, and occupancy is still declining at an accelererating rate indicates 2009 will be a year of remarkable value for travelers able to take advantage of the hotel economy downturn for some personal leisure benefits.

 

Story sources:

PKF Consulting April 11, 2008 – UK hotel sector well-positioned for challenging 2008.

Hotel Travel News November 14, 2008 -  London Hotels Set for Tough Year

Hotel Travel news December 15, 2008 – UK Hotels Feel the Pinch

 

 

 

 

 

 

I read Christopher Elliott’s blog post today onTripso.com, “Brace yourself for one of the deepest and longest hotel recessions in modern history”. 

Hard Times Call for Harder Travelers.

I look forward to the hotel bargains of 2009.   

 

Leading Hotels of the World $19.28 Promotion for 80 Minutes on Wednesday, October 1, 2008

Leading Hotels of the World (LHW) is the largest luxury hotel brand around the globe.

Bernardus Lodge, Carmel Valley, California, Leading Hotels of the World participating member in 1928 promotion

The LHW Offer:  6,000 luxury hotel rooms — 96 luxury hotels — 45 nights — $19.28 room rates

… if you are lucky enough to secure a reservation.

Booking Window: Wednesday, October 1, 2008 beginning at 8am Eastern time for an 80 minute window at $19.28 rates.

Eligible hotel stay period:  November 1 – December 15, 2008 is the stay period eligible for $19.28 room rates.

Registration required at this LHW link to be eligible for $19.28 rates.

Maximum of one hotel reservation per household and maximum 2 nights at $19.28 rate.

LHW 1928 Promotion Terms and Conditions – link here.

Bernardus Lodge croquet lawn, Carmel Valley, California

Steps to success:

1.      Register for LHW promotion here.

2.      Study the hotel properties.  Pick your top 3 to 5 hotel locations for destinations that you are confident in being able to travel to during the 45 days eligible for the $19.28 rates.  

3.      Remember one reservation per household for a maximum two nights at $19.28 per night.

4.      Keep in mind that hotel urban locations tend to have better availability on weekends and resort locations tend to have better availability on weekdays.  This may or may not be the case for this promotion.

 

Bernardus Lodge pool, Carmel Valley, CA

This is a good promotion for exposing travelers to the Leading Hotels of the World group of luxury accommodations.  And this is an incredible opportunity for hotel room rate savings with the most expensive luxury hotel brand in the world.  A news report last February showed the average room rate for the Leading Hotels of the World hotel members in 2007 was $470.  This group of hotels had the highest average room rate of the luxury hotel segment. 

1928 is the year the Leading Hotels of the World was founded hence the $19.28 promotional rates.

Bernardus Lodge lobby seating, Carmel Valley, CA

Total room night sales of 1.65 million in 2007 with fewer than 250,000 of those rooms booked over the internet at www.lhw.com may be a primary reason for this discount promotion.   With five of six hotel room nights booked for LHW stays not happening through the lhw.com website this promotion is a good marketing tool to increase reservations traffic over the internet.

Promotions like the 1928 online promotion are a clever marketing strategy for increasing LHW brand awareness, new Leaders Club members, and lhw.com website activity.  The Leading Hotels of the World has over 450 hotel members and about 84,000 rooms worldwide.  A bit more than 20% of the LHW hotel members are participating in this promotion. 

Bernardus Lodge cabin room surrounded by spring flowers, Carmel Valley, CA

Leaders Club is a $300 membership hotel loyalty program for Leading Hotels of the World.  For hotel travelers who plan to stay at a LHW member hotel on regular paid rates, the Leaders Club is a means to complimentary upgrades that will likely result in a rebate equivalent to the membership fee after one hotel stay.  Complimentary membership to Leaders Club is available for newsletters and special offers, but don’t expect the complimentary upgrades with a complimentary Leaders Club membership.

Bernardus Lodge fountain and rooms, Carmel Valley, CA

Geographic regions for 97 participating

hotel members in the 1928 promotion.

 

South Africa    2 hotels

South America    5 hotels

Caribbean    2 hotels

North America    14 hotels

Europe    63 hotels

Asia    11 hotels

 

Bernardus Lodge tennis courts, Carmel Valley, CA

 

If at first you don’t succeed…try…try…try again.

The past month has seen me frustrated with trying to secure these “first-come, first-served” promotions with unsuccessful attempts at getting the Sheraton San Diego for $5.01 a couple of weeks back (LT post here) and prior to that the Super 8 Motels $8.88 rooms (LT post here). 

Bernardus Lodge Spa, Carmel Valley, CA

While I don’t count on landing this incredible hotel deal, the opportunity to book a luxury hotel room night selling for less than 5% of the average daily rates for most of these participating hotels will have me setting my alarm clock, and readying my mouse finger for scrolling and clicking at 5am California time Wednesday morning, October 1. 

 

 

Bernardus Lodge Ingrid’s Vineyard, Carmel Valley, CA

 

 

U.S. Hotels Forecast: 3 Consecutive Years Declining Occupancy

HotelMarketing.com has an article with sobering hotel industry statistics for travelers.  Hotel occupancy declined by 0.3% in 2007 according to Smith Travel Research.   PKF Hospitality Research forecasts 2008 and 2009 will see even greater occupancy declines. 

Hotel stay demand is softening just as 275,000 more hotel rooms are scheduled to open by the end of 2009 compared to the end of 2007.  This is predicted to be the first time in 20 years hotels have experienced two consecutive years of occupancy decline.

Don’t make the rational conclusion that three years of declining hotel occupancy will lower average hotel rates.  The average hotel room rate for the U.S. is still predicted to rise 3.6% for all of 2008, followed by another 1.3% in 2009. 

The Good News?

Mark Woodworth, President PKF Hospitality Research, states hotel rates should not exceed the rate of inflation until 2012. 

I wonder if that considers the inflationary impact of printing $2,000,000,000,000 in money to borrow our way out of the current economic melt-down (there sure are a lot of zeros in trillions).

The Good News, Really!  Starwood Lowers Rates for Some Hotels

Looking over hotel rates here in the San Francisco region I see several Starwood hotel properties with rate drops for weekend travel.  I have predicted all year that as hotel rates increase for business travel days, Sunday through Thursday nights, the weekend rates for Friday and Saturday should decline to attract leisure travelers.  Resort locations tend to have the opposite peak period of higher rates for Friday and Saturday and lower rates Sunday through Thursday.

Starwood Hotels has 21 properties in the San Francisco Bay Area.  Recently, I have noticed rate drops at several hotels for weekend stays to some of the lowest rates in over two years.

W Silicon Valley has been stuck on $109 weekend rates for over two years and suddenly I see rates back down to $79.  This is an even lower rate than the limited time “Summer Sale” special offer Starwood Hotels ran last month. 

Sheraton San Jose is at $84 for many weekends over the next couple of months.  This hotel has just remodeled many of their rooms and rates had been $99 average for the past year.

The Palace Hotel in San Francisco which had been going for under $150 for many weekends in 2006 suddenly jumped up to $200+ for much of 2007 and 2008.  I see November rates back down as low as $139 for weekend nights.

There appear to be more bargains for the leisure travelers in combination with some of the best hotel loyalty program promotions of 2008.

Use the Categories link for “Fall 2008 Promotions” on the left side of the page to read about currently available promotions in all the major hotel loyalty programs.

Please leave a comment if you are seeing similar reductions in hotel rates for your area.

Hotel industry statistical data source: HotelMarketing.com U.S. Hotels to Bottom Out in 2009

Link to HotelMarketing.com

Link to Loyalty Traveler post: Hospitality Researchers Advise No Hotel Rate Cuts in 2008

 

Today I want to comment on a number of articles I have seen over the past week.

#1  - Does a guest on a stay using points pay resort fees?

Last week a FlyerTalker raised this question on the Starwood Hotels forum.

The general reply was Yes, the guest does pay the “resort fee” when staying at a resort hotel on points.  I found this to be the case with a $20 “resort fee” when I stayed at the Westin Mission Hills Rancho Mirage (Palm Springs area) in April on a Cash & Points rate.  Here is my trip post about the Westin Mission Hills hotel in April 2008.  Fortunately, most hotels do not have add-on “resort fees”.

 

#2 – Food & Beverage Pricing Tricks

This article gives hotels tips on how to trick the consumer into thinking the price has better value.

As a former mathematics content editor for state-level student assessments I find “Confusion Pricing” an interesting trick.  If not many people can work out the nightly cost of  a hotel room that is priced at $545 per week, then the hotel industry has little to fear from my blog that focuses on showing loyalty program value through simple math.

 

#3 – Hilton Moscow Leningradskaya has opened and is Russia’s first Hilton.  The 28-story historic Stalinist neoclassical skyscraper underwent a two year $100 million dollar renovation.  A sample rate check for October 16, 2008 showed the lowest available rate of $548.52 + $98.73 tax for a grand total of $647.25 for a twin deluxe room.  No blackouts for awards with a Category 5 free night at 35,000 points makes for a much better value using points.  A six-night GLON2 award for 150,000 points would have almost a $4,000 value.  Now that is Points Power!

 Hilton has big development plans for Russia with as many as 70 properties scheduled to open over the next decade.

 

#4 – Beijing Olympics Hotel Rates were triple the regular average rates according to STR Global.  The average daily rate for hotel rooms across Beijing was $446 during the Olympics.  Some of the Olympic sporting venues looked rather sparse in spectators on the TV, however, with hotel occupancy hovering around 80 to 90% city-wide there was probably quite a bit of spectator action in hotel lobbies.  While Beijing was hopping with activity, the hotels in Hong Kong, host of Olympic equestrian, and Qingdao, the site of sailing competition experienced a decline in average hotel occupancy for the Olympics.

By the Tuesday after the games closed, hotel occupancy had dropped to less than 35% and room rates also dropped dramatically by 60%.

 

#5 – Resort Hotels Across the USA Lower Average Rates in 2008 according to Smith Research and this article from the Wall Street Journal.  Resort occupancy declines in the 6% to 10% range being felt across the country and some hotels see no alternative but to lower rates.  (But, remember those resort fees!)

#6 – Switching Hotel Rooms: Legitimate Request or System Scamming?

This New York Times article looks into people who check into a hotel and then seek a different room.  And the article states women are more likely to request a room change.

My record is for the Hotel Pulitzer Amsterdam, a Starwood property.  I think I made two room change requests before the hotel gave me a room that I felt was worth my money paid.  I have felt compelled to request room changes for the Pulitzer on at least three stays.  Amsterdam is just too pretty to be in an interior facing room.

The number one benefit of elite status in a hotel loyalty program is the high probability of getting a room with a preferred view for the hotel site.

Travel Going Down, Down, Down. It’s the Economy, Stupid!

Global hotel rates are up overall, year-over-year for July 2008, in all regions except the Caribbean, reports STR Global.  The STR Global survey set of over 36,000 hotels and nearly 5 million rooms probably comprises all of the 25,000 or so hotels in the top 10 major hotel loyalty programs.

The Middle East/Africa was the only global region to experience increased hotel occupancy.  Oil and war must be a good hotel filler combo.  The more than 3% higher occupancy levels were in the face of a 30% increase in average room rates in July.   With per night average room rates still only at $150 for the North Africa/Middle East region, the low cost North Africa hotels mitigate the luxury priced rates of Dubai.  The most expensive hotels regionally on average are to be found in Europe, but the recent drop in Euro value relative to the dollar throughout August could mean an actual decline for prices in US Dollars in the coming months.  Europe is seeing tougher economic times developing and the hotel rate increases for the coming year are unlikely to match the exuberant room rate hikes of 2007. 

European hotels had occupancy declines of over 2% from summer 2007 to 2008 and the Asia Pacific region had a larger decline of 7% occupancy, yet average room rate increases of more than 14% in both regions kept hotels profitable.  Currency exchange rates more favorable for Americans coinciding with a general overall drop in hotel travel throughout much of Europe may make 2009 a good year for finding more reasonable room rates for an American traveling internationally.

South America is seeing occupancy gains year-over-year for the hotel industry.  My last international trip to South America in 2007 provided great value for the dollar on transportation ($5USD extra to travel First Class on a one hour, 3-cabin, high speed deluxe ferry from Buenos Aires to Colonia, Uruguay), hotels (six different Starwood properties), and food ($1.00USD for 1.0L bottles of Stella Artois in the local Buenos Aires market). 

North America is experiencing declining hotel occupancy, led by the Caribbean hotels.   The Caribbean is the one global region that has not been able to sustain positive revenue growth for the year.  Rates have dropped for Caribbean hotels (but, still way overpriced!) while the Americas as a whole saw an increase for room rates by almost 3% for the past year.

As an industry, hotels have been raising room rates at a pace much higher than inflation for the past four years.  This is at the same time the American working person is on average not earning pay rises to match the inflationary pressures.  California is at a 12 year high for unemployment at 7.3%.  The average hourly wage in California has increased 2 cents over the past three years from $22.52 to $22.54.  Everything in the household budget is increasing in cost while Americans on average had the biggest decline in three years for personal income. 

At 2,000 working hours per year, the average worker has earned about 4,000 hotel points worth of wage gains or 2,000 frequent flyer miles in additional wage value per year.  At least the loyalty points and miles are not taxed like wages.  A traveler better start collecting MyPoints to supplement the travel budget.

Economic necessity is compelling the consumer to make choices of where to spend money.  And all travelers are consumers.  Hotels seem to be one of the cuts for many travelers as evidenced by hotel occupancy declines in most regions of the world.

The interesting factor I am waiting to see is how hotel loyalty programs restructure their free night redemption charts over the next year.  Hotel loyalty programs in the past have based their redemption rates for a free night using points on the hotel’s average daily rate for a room.  On one hand the lowest average daily rates are in North America ($108) when compared to Europe ($167), the Middle East ($150), and Asia Pacific ($137) regions.  On the other hand, the large majority of hotels in most of the major hotel corporations are located in the USA and although these hotels have some of the lowest rates worldwide, most of the free room redemptions for the major hotel loyalty programs are made at USA hotels. 

Hopefully, the loyalty traveler will see “category creep” be a minor issue in 2009.  There has been an alarming category reclassification shift over the past three years.  The hotel loyalty programs have moved most of their hotels up at least one category in redemption level and many hotels to much higher category levels for free nights using points.  The hotels used to be distributed more heavily towards the lower redemption levels in the Starwood, Marriott, and Hilton programs.  Hotels in the Category 1 and 2 segments have been dwindling as the Category 4, 5, and higher hotels swell in numbers.   Perhaps 2009 will be the year when a significant number of hotel properties in the USA actually drop in redemption category.  Now that would be a boost for the frequent guest and actually justify a full-scale press release for a program enhancement.

 

Loyalty Traveler note:  Much of the commentary here is based on the research work and data of Smith Travel Research and STR Global who produce a variety of reports on USA and global hotel rates and occupancy levels. 

 

The Happiest Place on Earth – Orlando, Florida actually saw a decline in room rates for July 2008 by almost 2% from last year.  A sign for 2009?