The Hotel Data Conference was held this past week at Loews Vanderbilt Hotel in Nashville. One of the headlines from the conference caught my attention with –  

“Hoteliers could be leaving as much as US$50 on the table by not charging guests what they expect to pay.” 

The statement is based on a presentation by Nate Fristoe and the RRC Associates Travel Intentions Survey which showed U.S. leisure travelers late last year had expected to pay $294 per night for a luxury hotel in January to June 2010. The rate paid for a luxury hotel night during this time period was actually $244 per night.

The conclusion appears to be that hoteliers could have charged an extra $50 per night for their hotel rooms and consumers would have accepted those rates.

Really now? 

The last two luxury hotels I stayed in received an extra $5 of that $50 on the table when I needed to purchase coffee in the morning. Luxury hotels are the only hotels I have stayed in the past year where there was no complimentary coffee service in the hotel lobby. And often the complimentary coffee in luxury hotels is so discreetly placed that you need to ask where to find this freebie, if available. 

The RRC Associates data showed leisure travel price gaps for all market segments from economy to luxury hotels with the smallest gap in the midscale hotel market at $106 expected rate vs. $87 actual rate. Surprisingly to me is economy hotel rates were the next biggest consumer-seller gap with leisure travelers anticipating rates of $86 per night for the first half of 2010, but actual spending came to just $49 per night for a $37 room rate gap. 

Upscale hotels showed a $33 gap from $161 expected to $128 actual rate paid.

So does this mean hoteliers will be raising rates rapidly in the latter half of 2010? 

Some markets like New York City appear to be pushing the rate ceiling skyward again with room rates jumping more than 10% in the past year. Rate increases on average are still confined to a few hot spots in the U.S.

Consumer sentiment is still low as we finish out the 2010 year.  Another finding by RCC Associates Travel Intentions Survey is leisure travelers clearly consider room price the most critical factor (44%) when choosing a hotel. Loyalty programs came in distant second with 16% of respondents citing this as a factor in choosing a hotel.

Luxury Hotels are making a big comeback in occupancy and price rate increases in 2010, but is that attributable to the lower, and might I say more reasonable pricing for luxury hotels this past year?   

The consumer optimism of six months ago has taken a hit as the economic recovery stalls for working Americans and travel plan expectations diminish. Destination Analysts, Inc published their report in July, “The State of the American Traveler” (pdf) with the headline “Leisure Travel Outlook Weakens”.

My September column for InsideFlyer used data from that report to argue that hotel recovery without a recovery in the economic conditions for the vast majority of leisure travelers makes rapidly rising hotel rates a move that will drive millions of Americans to downsize hotel market class segments to cheaper rate segments – luxury to upper-upscale; upper-upscale to upscale; midscale to economy – or even move away from hotels altogether.

“Glamping” seems to be the 2010 replacement for hotel staycation. Google search glamping!

I wonder how the Economy sector of hotels will survive low rates in the $50 range while the upscale and luxury segments of hotels push hard to bring rates up at a more rapid pace. The divide in hotel rates and economic classes may mirror the widening American income gap between the wage class and wealthy class.

The economy sector of hotels is still losing rate pricing ability in the latter half of 2010 while luxury and upper-upscale hotels are geared to test the rate increase waters in the last half of 2010.

Can luxury hotels continue to fill rooms and maintain occupancy in 2011 with higher rates?

In early 2009 the industry analysts were saying 2010 would be the year when hotels would come out of the rate doldrums. By late 2009 the forecasts were more subdued. Now in August 2010 the industry is predicting a better 2010 end-of-year forecast with 2011 forecast to be even better.

The lackluster hotel loyalty promotions going into the fall 2010 season leave me wondering if hoteliers will see a drop in occupancy when rates go up and hotel loyalty promotions drop out.

I still have my doubts on a U.S. hotel recovery in 2011.

Marriott Hotels released 2010 first quarter financial results a few days ago. What I like about hotel quarterly financial reports is the ability to see how many hotels are currently in the chain and what has changed with room rates over the past year. The number of hotels in a hotel company is an important metric for loyalty travelers. The more hotel locations a chain has to offer frequent guests means the better opportunity to meet the traveler’s needs for paid room nights and award room nights. I particularly like to keep an eye on the full service Marriott Hotels, and the high end J.W. Marriott and Ritz-Carlton properties for nights using points.

Marriott had 3,457 properties as of March 26, 2010. This is 230 additional properties opened in the past year under Marriott brands. This is more than 7% expansion of the Marriott chain in the worst year of the hotel industry in decades. The strong hotel chains grow stronger in this weak travel environment. (Loyalty traveler note: there is a discrepancy of one hotel between Marriott’s financial report at 3,457 and the numbers in the table below at 3,456. I can’t figure out where the missing hotel is located. In the big picure this is not so big a discrepancy.)

Marriott International Hotels by Brand as of March 26, 2010

Rates have continued to drop and are significantly lower in 2010 than a year ago. Rates have dropped on average by 5% to 10% in the USA. Occupancy has actually picked up slightly. The luxury sector with Ritz-Carlton in the lead has seen the largest occupancy increases of any Marriott brand in the past year. The mid-scale and extended stay market segments show slower occupancy growth. Looks like the well-to-do guests are well-off again while frequent guests are returning back to mid-tier and extended stay travel more slowly.

Marriott’s domestic hotel performance lags behind the international hotel room rates and occupancy levels. Asia-Pacific has seen great occupancy growth. The USA has only seen a 3.0% occupancy increase over the past year and worldwide a 3.6% increase. Rates meanwhile have continued to drop and the average daily rate in the US is $120 compared to $165 international.

Marriott forecasts rate increases in 2010 as hotels attempt to push up average daily rates in the face of higher occupancy.

Marriott International Domestic and Regional Average Daily Rates and Occupancy

Source: http://investor.shareholder.com/mar/releasedetail.cfm?ReleaseID=462338

So why is my hotel award so much more?

Hotels.com has released their 7^th annual Hotel Price Index (HPI). This Expedia owned company has extensive hotel data from over 94,000 hotels in 16,000 locations globally, providing comprehensive data on the state of the hotel industry.

This is a fantastic resource for hotel rate data. There are plenty of visuals with geographic detail on hotel rate changes around the world in the 38 page report. You can even see a breakdown of US states and major cities to get an idea of average hotel rates in your location.

Bottom line is hotel rates dropped significantly over 2009. The HPI states hotel rates were actually lower at the end of 2009 than they were at the time of the first set of hotel rate data gathered in the first quarter of 2004.

This might be helpful in planning your vacation if you want to get an idea of where to find the bargain travel destinations. Or perhaps you want to know where the jet set are vacationing? Could it be Capri?

Link to Hotel Price Index Study – March 2010

Smith Travel Research in Hendersonville, TN is one of the leading hotel industry data reporters.  Last week the company published its 2010 hotel industry forecast. In the first month of 2010 the company is predicting hotel occupancy will remain flat in 2010 and finish the year at 55.1%. This is after an 8.7% drop in 2009. On average, across the U.S. hotels will go through 2010 just more than half-full.

A consequence of low occupancy is continued lower room rates. STR predicts the average rate of a hotel room will decrease another 3.3% this year to finish 2010 at US$94.39 per night. The average daily rate for U.S. hotel rooms fell over the 2009 year to $97.51, an 8.8% drop . (STR source)

Sure, you will still see $400 per night for many New York City hotels, but you will also see $35 per night rates at some Comfort Inns and Knights Inns around the country. And even those typically $400 a night luxury hotels will likely have rooms in the $200 range in many locations when travelers are not filling $400 per night rooms.

A luxury hotel takes five years or more to go from planning to opening. 2010 will see a large number of luxury hotels opening in the U.S. that looked like solid investments when they were initially planned way back in the boom of 2005. Demand is expected to pick up in 2010, led by the luxury and upper-upscale hotel market and business and leisure travelers. Unfortunately for the hotel industry, demand is expected to increase at the same percentage as new hotel rooms being added in 2010, 1.8% in the U.S.

This looks to be another year of unprecedented luxury hotel bargains. Grab them if you can as these deals may not be so readily available after 2010. 2009 was the most time I have spent in luxury hotels and the cost was less than I have ever landed luxury class hotels in my years of loyalty travel.

2009 was a tough year financially for the hotel industry, particularly in the U.S. The “great recession” of 2009 produced data harking back to the “great depression” of 1929. Mark Lomanno, president of STR, stated, “Good riddance to 2009, a year that we believe will go down as the worst in the modern hotel industry.”

If you think being underwater $100,000 on your home mortgage is bad, imagine trying to sleep at night thinking about how your $400 million hotel investment has lost $100 million in value with the real estate crisis of the past two years.

The western playground of Scottsdale, Arizona has newly opened hotel properties like the InterContinental Montelucia and Starwood’s W Hotel Scottsdale sitting around waiting for foreclosure auctions.

So why are hotel loyalty programs being so generous?

And why are loyalty travelers so happy?

Hotel loyalty program bonus promotions have offered some of the most generous bonus incentives for frequent guests in years. Free night offers and bonus point offers are hard, fast, and repetitive, yet hotel occupancy and hotel room rates are still declining after a full year of unprecedented declines for the lodging industry.

Hotel loyalty programs are increasing the value of hotel points by offering repeated discounts on the cost of a free night using points. IHG Points & Cash; Marriott Rewards discount on PointSaver nights; Starwood Preferred Guest eliminating higher point peak season rates for 2009 on free nights using points at its high-end hotel Category 5, 6, and 7 properties.

Ironically, in the face of increased value for hotel points, Hilton HHonors has cut back on availability using Point Stretcher discount nights with HHonors points for 2009. A rumor spread on FlyerTalk in July stating HHonors Point Stretcher nights, free nights using points at a 40% discount, would be discontinued for 2009. In August, a Hilton HHonors posted a statement on its website stating Point Stretcher awards would be posted in September. It is now September 28 and there have been no hotels posted.

The message now simple states: Point Stretcher Dates are currently unavailable.

http://hhonors1.hilton.com/en_US/hh/rewards/pointstretcher.do

And occupancy levels are still declining and hotel rates continue to fall every month for the past year.

Hotel loyalty programs are repeatedly lowering the qualification requirements for hotel loyalty program elite status in 2009. Starwood, Marriott, and Hyatt offered double elite credit in 2009 promotions and Hilton will give most anyone a shot at Gold for 4 stays. IHG sells InterContinental Ambassador status and purchasing your way to Priority Club Platinum is a fairly easy task.

And occupancy levels are still declining around the US.

Hotel rates in the US have dropped nearly 10% in the past 12 months and some locations have posted 15% to 20% declines in room rates.

And occupancy levels are still declining around the US.

Why the next two months are important to watch for hotel industry indicator data.

A year has passed since the economic bubble burst bringing lower rates to the hotel industry. The industry is only projecting profitability to start improving in the latter part of 2010. The next two months may still show declines in occupancy and room rates and these will be based on the large declines in occupancy and rates from October and November 2008.

2009 snapshot of US hotel industry room rate and occupancy data.

December 2008

The occupancy and room rate declines were quite apparent a year ago in late 2008 when in the first week of December 2008 New York City occupancy had declined 9.2% from the same week in 2007 as room rates had fallen 14.9% over the year to average $348 per night. Rates had pushed $380 average by 2007.

In December 2008 PricewaterhouseCoopers predicted a 2% decline in US hotel demand for 2009 and a RevPAR decline of 5.8%. http://www.hotelmarketing.com/index.php/content/article/hotel_giants_seek_refuge_in_niches/

February 2009

February is the peak travel month of the year for Hawaii. In February 2009 the numbers showed a 12.4% room rate decline from 2008 with room rates dropping from $213.62 to $187.21. The room occupancy rate fell to 74.7%, its lowest level since the 1991 Gulf War. http://www.usatoday.com/travel/hotels/2009-04-06-hawaii-hotel-occupancy_N.htm

March 2009

Hotel Marketing published hotels.com findings in late March 2009 indicating New York City real room rates had dropped to $255, a 22% drop for the final quarter of 2008 compared to 2007. The data also stated real room rates were only 1% higher than January 2004.

http://www.hotelmarketing.com/index.php/content/print/global_hotel_prices_down_by_12_percent/

By mid-March 2009 the hotel industry forecast by PKF Hospitality Research (PKF-HR) called for hotel occupancy to drop 7.8% in 2009 across the US. The 6.4% predicted drop in average daily rate would designate 2009 as the greatest hotel rate decline since data was first tracked in 1932 by PKF-HR. Remember the forecast made in December 2008 by PwC was 2% occupancy decline for the year. The biggest plunge in hotel profits since the 1930s was predicted.

PKF predicts the greatest hotel rate discounting will occur in Summer 2009.

“In 2010, the vast majority of cities are still forecast to experience a decline in RevPAR for the year.  However, emerging signs of economic recovery are expected in many markets, and 14 cities across the U.S. will enjoy RevPAR increases over 2009.  Joining Anaheim and Minneapolis as the markets expected to lead the lodging industry recovery are the cities of Atlanta, Austin, Detroit, Oahu, Fort Worth, Raleigh, Chicago, Dallas, Nashville, Columbus, Albuquerque, and Houston.”

* March 2009 Hotel Horizons Report

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=859&ArticleType=0&print=true

RevPAR is an indicator of hotel profitability. So did we seen signs of RevPAR declines in line with this forecast in the 6 months since the table was published?

New York RevPAR decreased 31.8% for August 2009. Nationally RevPAR decreased 19% for August 2009. Phoenix RevPar had decreased 25.8% by July 2009 according to STR compared to the PKF forecast of 20.5% for the year. These three indicators show more than a 5% negative variance on the figures in the table. The hotel industry is worse off than the March 2009 forecast.

April 2009

Smith Travel Research data for the first week of April  2009 showed Anaheim average room rates had dropped 17% to $107 per night. Chicago also listed above as a market recovery leader saw a 22% year-to-year drop in occupancy from April 2008 and a 24% average room rate decline to $111 per night.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=980&ArticleType=0&PageType=SameAuthor&print=true

At the end of April STR released a revised 2009 hotel industry forecast calling the first two quarters of 2009 to be the trough and relief emerging in the latter part of 2009. Year-end occupancy in US hotels was projected to decline 6.5% to 56.5%. The average daily room rate was projected to be down 3.6% to $102.89.

May 2009

Luxury Hotels Room Rates Drop

In late May 2009 STR’s Luxury Chain Scale, a composite of about 30 luxury and high-end hotel brands showed occupancy had declined 14.5% to 63.1% by April 2009 compared to April 2008. Room rates had fallen 16% to $249 per night across these hotel brands.

http://www.hotelnewsnow.com/articles.aspx?ArticleId=1259&PageType=Featured&ArticleType=1&print=true

June 2009

By June PKF revised its forecast to project falling room rates for the remainder of 2009, however, the rate declines would slow later in the year. Occupancy declines were still projected at 8.1% and room rate declines for the year were posted at 10.2% for 2009. Room rates were also predicted to fall another 3.3% in 2010.

http://www.btnonline.com/businesstravelnews/headlines/article_display.jsp?vnu_content_id=1003983721

STR released May 2009 data showing all 25 major hotel markets in the US saw year-over-year declines in average daily rates and occupancy. Oahu, Hawaii had the lowest occupancy decline of any major market at 4.9% drop.

Detroit, predicted by PKF to be a leading indicator of hotel market recovery in 2009, led the US in occupancy decline at -20% from May 2008. Houston and Dallas also cited by PKF as hotel recovery indicator markets had greater than 15% occupancy declines.

Nashville had the lowest decline in average room rate at just 4.1% to $91 per night.

STR June monthly data showed Minneapolis, Houston, Phoenix, and Detroit had seen the largest occupancy declines in the nation, each city with more than a 15% drop in guests. Three of these cities were cited as leading indicators for hotel market recovery by PKF in March 2009. New Orleans was the only major market to show slight gains in rates, yet still showed a slight decline in occupancy.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=1577

July 2009

In July STR came out with a summer 2009 forecast of the hotel industry indicating some stabilization may be in sight. STR’s revised forecast called for 2009 year-end occupancy to decline 8.4% and Average Daily Rate by 9.7% to $96.43. In the three months since the STR April forecast the ADR decline had jumped from 3.6% to 9.7% for 2009.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=1487&ArticleType=1&PageType=Todays&print=true

The STR data in July showed New York average room rates had dropped 26.6% to $180 per night. San Francisco (ADR $118), Oahu (ADR $180), Houston (ADR $86), and San Diego (ADR $124) had all seen room rates drop more than 15% over the course of the previous year.

September 2009 – The Current Situation in the US Hotel Industry

In September 2009 STR released a hotel industry forecast stating transient leisure growth was the recognizable trend. STR looks cautiously to leisure travelers continuing to spend in hotels and bring the hotel industry indicators into positive territory in November 2009.

Why are hotel loyalty programs being so generous? The leisure traveler is leading the recovery of the industry and hotel chains have a desire and an interest to retain leisure travelers.

STR monthly hotel data numbers for August 2009 shows occupancy declined 9.9% to 60.7% across the US. ADR has dropped 10.1% to $96.58 per night.

The US lodging markets with the lowest decreases in occupancy are Washington,D.C. (65.5%), Boston (74.1%), San Francisco (84.7%), Oahu (78.3%), and Tampa (48.2%). The other 20 major hotel markets had occupancy decreases in excess of 5% from August 2008 led by Detroit and Houston.

The average daily rate declined the most in Denver with a rate drop in excess of 30% to an ADR of $90 per night. New York (ADR $186), San Francisco (ADR $128), San Diego (ADR $131), and Minneapolis (ADR $92), all saw rates drop more than 15% in the past year.

http://www.hotelnewsnow.com/Articles.aspx?ArticleId=1914&ArticleType=38&PageType=STRPressRelease

Hotels and the Loyalty Traveler

Now in late 2009 we are looking at any further decline being weaker demand and rates on top of the steep hotel indicator drops from a year ago.

Loyalty travelers are loyal.

Hotels who offer a bargain to the loyalty traveler will see more frequent guests and those frequent guests will likely still be around when the group meetings resume and the general economy improves.

Happy loyalty travelers skimping to travel on the cheap in 2009 will find the way to hotels in hard times. Many of those same happy travelers will be high spending at hotels when times are better for the economics of hotels and the wallets of travelers.

That is why hotel loyalty programs are being so generous in 2009.

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

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

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

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.

Westin St. Francis Powell Street entrance

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.

Westin St. Francis Hotel, San Francisco

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).

Nob Hill view from 21st floor Westin St. Francis Tower room

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.

Westin St. Francis - Meet Me at The Clock

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.

Westin St. Francis lobby

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.

Westin St. Francis Michael Mina Restaurant

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.

Westin St. Francis Room 1205 historic building

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.

Peregrine Falcon on ledge of Westin St. Francis Nov. 2007

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.

Westin St. Francis Tower viewed from Geary Street

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.

Westin St. Francis view over Geary Street and Hilton SF Hotel

Most Tower rooms will face Union Square.

Westin St. Francis Tower view towards 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.

Westin St. Francis View of Golden Gate from top floor 32

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

Westin St. Francis Victor's Palace 32nd Floor

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

Art Deco on Westin St. Francis 32nd Floor Victor's Palace

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.

Westin St. Francis Historic building view from tower rooms

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.

Westin St. Francis Flag and San Francisco skyline from Tower

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.

Westin St. Francis interior facing guest rooms

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.

Westin St. Francis view to Coit tower

The Rooms:

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

Westin St. Francis 12th Floor Cornace

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.

Westin St. Francis Room 1205 historic building

The Tower rooms have more generic styles of furniture.

Westin St. Francis Tower room desk

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

Westin 12th floor room bed

Westin St. Francis Tower room bed

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.

Westin St. Francis Tower corner room

A 10th floor junior suite contained a couch:

Westin St. Francis 1016 Junior suite furnishings

Bathrooms tend to feel well designed:

Westin St. Francis Bathroom

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

Westin St. Francis stairway

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

Westin St. Francis hall light

Old stairways have a beautiful symmetry:

Westin St. Francis interior stairway of historic building

Wall art worthy of admiration:

Westin St. Francis Wall Art

And look above to ceiling detail:

Westin St. Francis Ballroom Ceiling

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.

Westin St. Francis Union Square view

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

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.