This is the season of travel surveys.  Who is traveling this summer and where are they going? Travel surveys reveal some trends, some indicators and some insightful data about which destinations are attractive or not.  Declining popularity is an indicator I view as a sign hotel bargains are to be found.

One of the most relevant statistics to me is the American Express finding that 19% of summer travelers plan to use loyalty program points and miles for 2012 summer travel. This percentage was only 15% just one year ago. That is over 25% growth in the number of travelers planning to use loyalty programs in just the past year.  Read More…

A travel article in the Los Angeles Times today seems to be filled with mixed messages. The title “Many Americans dream of driving across the country, survey shows” says 25% of men and 33% of women surveyed “always wanted to drive across the country” and have not yet achieved this adventure. 41% of Americans said they had already driven across the country in the Expedia sponsored survey conducted by Harris Interactive of 2,262 adults.

According to the survey, only 23% of Americans expect to travel internationally in the next year (and that includes Canada and Mexico).

I am an American who has made several cross country road trips across the USA. As a child I traveled across the country from California to the east coast and back with my parents – a couple of times. As an adult I have driven California to Maine a couple of times including from Eureka, California to Ellsworth, Maine which is about as far as a person can drive in the USA cross-country point-to-point. 

Eureka, California – Ellsworth, Maine = 3,491 road miles.

What I would like to know from the survey is whether people who had made cross country road trips were traveling for fun or what I think are more likely reasons for employment or family issue? My coast to coast cross country trips were all motivated by some other reason than a travel vacation.

The only people I recall taking cross country road trips for fun were young adults or retired adults with no employment commitments and school teachers who have six to eight weeks in summer to travel for an extended period.

Last summer I met a couple at a Holiday Inn Express in Salt Lake City from Nova Scotia who had driven across Canada to Vancouver, down the west coast to San Francisco and they were driving back across the USA via Interstate 80. The husband was retired and his wife was a school teacher.

My point is cross country driving is a relatively expensive way to travel since the time on the road requires lodging, unless you plan to couch surf or you are driving a vehicle you can sleep in which means your gas total is likely much higher. Road travel takes time. Six hours of driving a day gets you about 300 to 400 miles for the same amount of seated time as it takes to fly cross country coast to coast.

Not Enough Time or Money or Both

The statement by Joe Megibow, VP of Expedia, that tough economic times have forced Americans to cheaper vacation alternatives by driving instead of flying and taking shorter, more frequent trips does not match up with the objective of making a cross country road trip and the time needed to travel the USA by road rather than air travel.

That statement kind of knocks out cross country driving from coast to coast in the USA.

7,000 miles / 25mpg = 280 gallons of gas. At $4/gallon = $1,120. Our California gas prices right now are $4.20 to $4.35 on average.

Figure about $1,000 in gas more or less to travel from New York to California and back.

Last summer I took two extended road trips from Monterey, California to Vancouver, Canada and back. Then I traveled Monterey to Denver, Colorado and back. This was about 6,000 miles in road travel. I took over four weeks for these trips and I felt rushed most of the time with not enough time to stop and sight see around the places I was driving through in the western states.

I spent three nights in hotels each way driving the 1,200 miles to Denver when there is a nonstop United Airlines flight to Denver that requires 2.5 hours each way. My wife says she doesn’t want to do the desert drive again this year when I travel to Colorado for Travel Blogger Exchange 2012 (TBEX12). Five hours of flight time compared to 40 hours of drive time is preferable to her.

I am still debating whether to fly or drive. I really want to work in a whitewater rafting excursion in Utah.

Breaking News March 5: BlogWorld, the leading blogger convention in the USA just bought TBEX.

One thing I am sure of for true travelers on the road is the value of Wyndham, Best Western and Choice hotel points when roadtripping. There are many locations where Hyatt Diamond and SPG Platinum are meaningless and even Hampton Inn, Fairfield Inn and Holiday Inn Express hotels are far apart.

Brokeass Mountain Road Trip, July 2011

Monterey, California – Denver, Colorado

• Yosemite’s Tioga Pass Road across the Sierra Nevada Mountains
• Westin Monache Resort Mammoth for year round vacations
• Even Lonelier than the Loneliest Road in America
• Earth’s Oldest Trees in Great Basin National Park Nevada
• Less extreme than 127 Hours in Utah
• Brokeass Mountain Tour eastbound – Hotel Value at High Elevation
• Brokeass Mountain Tour visits Starwood in Denver
• Driving by the 14ers South Park to Aspen, Colorado
• Top of the Rockies on the High Road to Aspen – Independence Pass 12,095 feet.
• St. Regis Aspen – Too Late to Cancel
• Aspen, Colorado to Park City, Utah: Ghost lands of Buffalo Soldiers, Utes and Dinosaurs
• The California Trail across Nevada
• Homeward Bound – Carson Pass Highway 88 over the Sierra Nevada to Monterey

Where ya’ from dude?

When touring around San Francisco and Yosemite this past month, I heard many foreign languages besides Spanish. Where are all these people from?

Here are some statistics on overseas visitors I picked up at press conferences last week. The first set of data is from a California Travel & Tourism Fact Sheet and the New York data is from a NYC & Company “History of International Travel & Markets” page on International Visitors to NYC.

California Travel & Tourism Commission Facts

California had 13.6 million international visitors in 2010; a 9% increase over 2009.

Asia is driving growth in international arrivals with China, India and South Korea leading the way for overseas visitors.

California overseas visitors in 2010.

1. U.K. = 683,000 visitors spending $688 million.
2. Japan = 545,000 visitors spending $597 million.
3. Australia = 502,000 visitors spending $568 million.
4. China = 399,000 visitors spending $648 million.
5. South Korea = 390,000 visitors spending $460 million.
6. Germany = 388,000 visitors spending $387 million.
7. France = 382,000 visitors spending $354 million.
8. India = 184,000 visitors spending $303 million.
9. Scandinavia = 177,000 visitors spending $335 million.
10. Italy = 163,000 visitors spending $244 million.
11. Brazil = 113,000 visitors spending $147 million.

According to a B&B hostess I stayed with in Ireland back in the 1990s, her anecdotal experience indicated Australians were the most frugal travelers. This California data indicates it is the French holding back their spending. My uninformed explanation is the French probably don’t buy cases of Napa Valley wine to take back home. Then again, maybe the Australians just hang out in California longer.

New York City Overseas Visitors in 2010

1. U.K. = 1,095,000 visitors.
2. Germany = 588,000 visitors.
3. France = 548,000 visitors.
4. Italy = 431,000 visitors.
5. Australia = 419,000 visitors.
6. Scandinavia (Denmark, Finland, Norway, Sweden) = 400,000 visitors.
7. Spain = 357,000 visitors.
8. Middle East region (excluding Israel) = 355,000 visitors.
9. Eastern Europe (excluding Russia) = 353,000 visitors.
10. Brazil = 332,000 visitors.
11. BeNeLux (Belgium, Netherlands, Luxembourg) = 306,000 visitors.
12. Ireland = 268,000 visitors.
13. Japan = 216,000 visitors.
14. South Korea = 203,000 visitors.
15. China = 183,000 visitors.
16. Argentina = 175,000 visitors.
17. Israel = 169,000 visitors.
18. India = 147,000 visitors.
19. Russia = 94,000 visitors.

Sources: Office of Travel & Tourism Industries, Tourism Economics, NYC & Company.

International tourism is up in California and New York City and so are hotel rates in these globally popular locations.

Marriott reported second quarter profits last week that beat analysts expectations. Arne Sorenson, Marriott’s CEO, stated room rates will likely rise by the end of 2010 with the resurgence in corporate bookings. Hoteliers are optimistic that the industry will avoid a double dip recession. Increased room demand from business travelers will allow higher rates going into 2011.

Luxury and upper upscale hotels are seeing the greatest improvement in rates and occupancy. Occupancy in the luxury hotel sector has increased by about 10% in the first half of 2010. Luxury hotel segment room rates from June data for the US shows a 4.7% increase in average room rates to $236.59.  Some analysts believe the luxury segment will aggressively push rates upward and the more success the luxury segment has in raising rates, the more room there is for upward pricing of upper upscale hotels ($146 in April 2010).

Recent data from STRGlobal indicates virtually all the USA room rate increases in June 2010 were in upper end hotels and New York City.

The Big Apple bargains of 2009 are dropping from the tree as New York City is once again taking a big bite out of hotel guests’ pockets. New York saw double digit increases in room rates for June 2010 compared to a year ago, the largest increases in hotel rates for the US. The average rate for all segments of hotels in New York City is $230. Other places with brighter scenes for hoteliers are Chicago, Minneapolis, Denver, Oahu, and Boston.

So what about the leisure traveler?

For hotel deals you might want to look to New Orleans. Room rates in New Orleans have seen the largest decrease for top US cities in the past year with average rates at $105.

Blame the oil dip stick for New Orleans woes!

The good news?

The economy segment hotels had the largest average rate decrease for June 2010 with rates down to $51.19.

Oh yeah! Back to Arne Sorenson’s financial report last week. Even though corporate and premium room rates saw double digit growth this year, there are still about 15% of Marriott rooms listed at a discount.

So the deals are out there. You might just need to search a little harder to get luxury on a budget as we go forward in this improving upper upscale and luxury hotel economy.

Sources:

Washington Post – Marriott plans higher room rates to match uptick in corporate travel (July 15, 2010)

STR – Chain scales post mostly positive June results (July 20, 2010)

Hotel World Network – Data shows clear evidence of accelerating recovery (July 15, 2010)

Hotel Interactive – Luxury Stages a Comeback (June 22, 2010)

Robert Reich – Slouching towards a double-dip or a lousy recovery at best (July 3, 2010)

Hyatt had 409 hotels and 25 timeshares and residences as of March 31, 2010. There are 125 full service hotels in North America in the Park Hyatt, Hyatt Regency, Grand Hyatt, and Andaz brands.

Limited service hotels are the Hyatt Place and Summerfield Suites brands and number 182 hotels in North America. In other words, the market segment distribution for Hyatt in North America is 40% full service and 60% limited service hotels for the 307 properties. There are 102 international Hyatt hotels.

The room rate numbers breakdown is not reported by hotel brand or region, but by owned and managed hotels.

In general, select service hotels numbers show the Hyatt Place and Summerfield Suites hotel brands took a substantial rate dip over the past year with an average room rate decline from 10 to 12%.Occupancy increased 8.7 to 10.0% for the year.

Hyatt full-service hotels saw average rate drops of 8% in North America and 4% internationally when US currency exchange rates are excluded. The average room rate in North America at $157 per night is a full 25% less than the international average rate at $212 per night.

The shocker to me for Hyatt’s numbers is the occupancy rate at full service hotels in North America is only up 3.7 points to 64.3% despite a solid year from Gold Passport offering the best hotel loyalty promotions of the past decade.

Hyatt Place and Summerfield Suites select service brand occupancy increase of 8.7 points to 66.6% can probably be attributed in part on the lower cost for promotion fulfillment with free nights after two stays and elite status renewal with these lower priced brands. The average daily rate for these two hotel brands dropped over 10% in the past year to just $93.31 in North America.

The occupancy increases internationally of 8% year over year may indicate some success with Gold Passport loyalty promotions or just a better hotel market internationally compared to the USA.

The following properties were added to the portfolio during the first quarter of 2010:

• Andaz San Diego, CA (managed, 154 rooms)
• Andaz Wall Street, NY (managed, 253 rooms)
• Hyatt Place Charleston Airport, SC (franchised, 127 rooms)
• Hyatt Place Dania Beach, FL (franchised, 149 rooms)
• Hyatt Place Garden City, NY (franchised, 122 rooms)
• Hyatt Place Sacramento / Roseville, CA (managed, 151 rooms)
• Hyatt Place UC Davis, CA (franchised, 75 rooms)
• Hyatt Regency Clearwater Beach Resort and Spa, FL (managed, 250 rooms)
• Hyatt Summerfield Suites Dania Beach, FL (franchised, 143 rooms)
• Hotel Mar Monte, CA (managed, 197 rooms)

Source: Hyatt First Quarter 2010 Financial Release

My interest in Starwood Hotels financial statements is a search for information on hotel properties and average room rates. I simply want to assess trends of where room rates are increasing, how many hotels are in each brand, and how hotels are geographically distributed for the Starwood Hotels chain. I am not an investor and the company profits are little interest to me.

Starwood Hotels first quarter financials show significant occupancy increases for early 2010 coming off the devastating hotel conditions of the first quarter 2009. The good news for travelers is rates are down significantly in the USA from a year ago. Starwood is often cited as a pricey hotel chain and the average daily rate numbers for the different brands confirm this fact.

Starwood has nine hotel brands: St. Regis, Luxury Collection, W Hotels, Le Meridien, Westin, Sheraton, Four Points, Aloft, and Element. Four Points is the only real midscale brand and the only brand reported with average daily rates under $100 per night.

The dreams of a few years back of 500 Aloft hotels by 2012 appear to have been washed away by the economic tide that engulfed the worldwide hotel industry. There were only 39 aloft hotels as of March 31, 2010.

Asia is a bright spot for Starwood in 2010 while the majority share of USA properties in Starwood Hotels, as in other major hotel chains, drags down the overall financials of the company. Starwood may be in better shape than competitors Marriott, IHG, and Hilton due to a lower proportion of North American properties at just under 54% of its global hotel portfolio.

The trends show that luxury hotel rates dropped quite a bit in the US over the past year while occupancy has jumped the most for Starwood’s luxury brands. St. Regis/Luxury Collection average rates in the USA dropped by 13.4% accompanied by occupancy increase of nearly 10%. Remember that the AIG convention in fall 2009 that led to the backlash against luxury hotel stays for business meetings was a meeting held at the St. Regis Monarch Beach in Orange County, California. That hotel subsequently was foreclosed and changed ownership, yet still remains a Starwood Hotel as the St. Regis Monarch Beach.

Many travelers recognize the value opportunity to get luxury on the cheap in 2010. As occupancy rates increase we can probably see a move to push room rates higher in 2010.

Sheraton and Four Points comprise over half of all Starwood Hotels and their numbers are still looking weak on the occupancy front while hovering around 60%, so loyalty promotions can be expected to continue to try and prop up these hotel brand laggards.

Starwood Hotels shows 999 hotels according to the first quarter financials, but the company made a press release on March 31, 2010 announcing the Sheraton Qiandao Lake Resort in China as its 1,000th hotel globally.

Source: Starwood First Quarter 2010 Results

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.”

Hotels, the magazine of the worldwide hotel industry, posted an article yesterday on www.hotelsmag.com – Value to Remain in Vogue in U.S.

Not so surprising survey result for this loyalty traveler is the “household budget” remains the primary deterrent to future leisure travel.

The most significant decline in leisure travel is expected among Gen X and Gen Y, in other words, pretty much anyone under 45 years of age. Older people are expected to travel more in 2010.

“I’ve got no job, I’ve got no career, and the house is always a mess!” was the phrase my two-year-old niece repeatedly espoused last Christmas with extended little arm gestures. 2009 brought that toddler’s video mimicking gestures to reality for so many people in the U.S.

Leisure travelers are expected to be the majority of travelers filling hotels and planes with business travel flat for 2010. 53% of U.S. households say they are planning a trip by April 2010. One year ago that number was 56%. Let’s say there are 100 million housholds. 3 million fewer trips is a significant decline over the past year and a tough forecast on hotels over the next six months. Business travelers report only 18% of adults planning at least one business trip by April 2010 and 24% state fewer business trips are projected over the next six months.

The rather bleak outlook from the Travel Sentiment index  leads me to Joe Sharkey’s New York Times piece of November 23, “For the Hotel Industry, Recovery is a Long Way Off.”

Joe interviewed Lalia Rach, Dean of the Tisch Center for Hospitality, Tourism, and Sports management at New York University. I particularly like this comment from her, “The American consumer now really understands the quality-value price equation, and I’m not sure that has sunk into the hotel industry. That is the new normal.”

Hotel occupancy projected at 55% in 2010 is at lows only matched by the 9/11 aftermath and the Great Depression of the 1930s. Room rates are predicted to continue falling as hotel discounting is likely to be the norm for 2010.

Another piece in the New York Times by Elizabeth Olson, “Hotel Chains Try New Ways to Earn Loyalty” came out yesterday. Her article cites Forrester Research travel analyst Henry Harteveldt as saying only 36% of business travelers are brand loyal in 2009 compared to 42% two years ago.

In my head I guestimate 20 million business travelers (20M is just my estimate and not based on any source). The 6% overall drop in business traveler loyalty means hotel loyalty programs have lost around 15% of their business traveler customer base in the past two years. This amounts to around 1.2 million business travelers having dropped brand loyalty in the past two years in a market segment of 8.4 million business travelers who had hotel brand loyalty.

The Travel Sentiment index cited earlier stated leisure travelers will be filling the rooms and planes in 2010.

My Loyalty Traveler conclusion is leisure travelers can expect to be targeted by high-value hotel loyalty program promotions in 2010.

And if 2009 was a leading indicator of the travel industry forecast, then 2010 is the Year of Value.

Here are a collection of hotel news items that I have seen over the past week. These items just don’t seem big enough to dedicate an entire post for details, so I’ll just toss some elevator sound bites out for readers with links for topics.

1.       InterContinental Hotels Group states it has 44 million Priority Club Rewards members globally. Perhaps they should rename the loyalty program Priority Club Nation.   http://www.ihgplc.com/index.asp?PageID=116&NewsID=2366

2.       UN World Tourism Organization says 2009 travel is down 4 to 6 % globally. This is the first decline since a less than 2% decline in 2003.

3.       US Domestic Travel overall is down 3.8 percent for the year through September 2009. Leisure travel is down 2.7% while business travel is down a whopping 7.5% attributed primarily to a decline in meetings.

4.       The cost of international flights from USA was down 20% in September 2009 from a year ago.

(2-4 source: http://www.hsmaieconnect.org/news/154000370/4044202.html)

5.       Hyatt Hotels Corporation initial public offering of $1.14 billion in stock occurred November 4. Hyatt posted a $31 million loss for the first nine-months of 2009. http://www.bloomberg.com/apps/news?pid=20601084&sid=aPPIjpC8xV5w

6.       Singapore’s sovereign wealth fund, GIC, purchased 3 million of the 38 million shares for a 6.9% stake in Hyatt Hotels. Hyatt has a strong cash position with more than 5x the cash of Marriott and Starwood combined. (Ric’s note: Makes me think acquisition of new Hyatt properties is in the near future.) http://themalaysianinsider.com/index.php/business/43408-singapores-gic-buys-69pc-stake-in-hyatt

7.       Post Ranch Inn in Big Sur is a jewel on the edge of the Pacific Ocean that I visited last week when the temperature was unseasonably warm with high 70s/low 80s. The perspective of looking down 1,200 feet from the Cliff House rooms to the Pacific Ocean is an extreme and unique hotel experience. The rooms I had a chance to visit were eye-popping, the view dizzying, but the $1,500 to $2,200 per night price tag is what prompted my vertigo. Here are my Facebook post photos.

Infinity spa pool, Post Ranch Inn, Big Sur

8.       Fairmont Hotels has a winter sale through 11:59 EST, Thursday, February 19. The rates for Canada look good for now as opposed to the lack of room availability for the Winter Olympics. http://www.fairmont.com/promo/winter

9.       Marriott’s SpringHill Suites has a video memory contest for prizes. You need to recall ten items shown in a 2 minute video. I only got 8 of 10. http://videochallenge.spacetoinspire.com/

10.   Mexicana Airlines joined the oneworld alliance this month. There are two more days left to redeem Mexicana Go miles at 50% off for Mexicana operated flights systemwide for travel through March 25. US-Madrid or London via Mexico City in Business Class is 56,000 miles and around $500 in taxes. USA-Cancun is 30,000 miles First Class and about $100. Members can buy miles from Mexicana. http://www.mexicanago.com/en/page/promociones-go-welcome-p

11.   Hotels Magazine blogger Adam Kirby wrote his case for free hotel wi-fi and hoteliers roasted his feet over the poolside BBQ in their comments. http://www.hotelsmag.com/blog/1720000572/post/1170050517.html

12.   Ritz-Carlton Residences in Denver have gone into foreclosure after selling only one of 25 luxury units in the 202-room hotel building in downtown Denver. My first impression when I visited the property was “Hey, it looks out over the Greyhound bus station!” http://www.denverpost.com/ci_13776640

13.   The Center for Hospitality Research at Cornell released a new report stating a hotel’s presence on Expedia increases bookings made through the hotel website’s own systems. The researcher calls this the “billboard effect” whereby a potential guest just seeing the hotel listed on Expedia helps drive sales through the hotel’s own reservation channels. Perhaps Choice Hotels management read the report before agreeing to settle their contract with Expedia this past week.

http://www.hotelschool.cornell.edu/research/chr/pubs/reports/2009.html

Smith Travel Research (STR) released data through Hotel News Now  (HNN) on the US hotel industry’s 3^rd quarter performance. Numbers are still going down in the US. After a dismal 1^st quarter 2009 when nationwide hotel occupancy was just over half full at 51.8%, which was probably viewed by most hoteliers as a hotel half-empty, the best hotel loyalty promotions in years possibly had some effect in raising occupancy in the past two quarters.

IHG Priority Club gave us four free nights anywhere in the world for staying 8 nights between May 4 and August 15.

Hyatt Gold Passport gave anyone who asked top elite Diamond status and a low threshold of 15 nights for renewal (normally requires 50 nights) through the summer months and immediately followed that up with the best loyalty promotion in years offering free nights, airline miles, and elite status for the same Hyatt hotel stays.

Starwood Preferred Guest offered a free weekend night for every two stays between May and July with the unusual benefit of Category 6 hotel redemption for the free nights. I spent about $1,800 and earned 8 free nights for stays in Starwood Hotels with average rates over $400 per night.

It was a year ago that the bottom fell out of the hotel market. I noticed steep room rate declines in the 4^th quarter 2008 for areas I traveled. Prices dropped by 20% or more all along the west coast during a two week road trip I made from Monterey to Vancouver, Canada in the first half of November 2008.

The hotel industry is now looking to the 4^th quarter 2009 for signs of improvement. Recent reports have suggested the luxury and upper upscale markets may be showing some signs of revived life, but this report using STR data indicates room rates will continue to drop for some time and may require several years just to get back to the room rates currently being offered . The room rate collapse of late 2008 is expected to result in smaller room rate declines than the previous three quarters when comparing year-over-year change in the 4^th quarter 2009 hotel industry data.

For now, the market still looks fairly weak across the board. San Francisco has had high occupancy lately. My stays in the city last month revealed the lights were on in most rooms around the hotels of SoMa district near the Moscone convention center. San Francisco had over 90% occupancy in the first weeks of October.

And New York hotels are filled with a near 87% occupancy rate in mid-October.

So what is the bad part of the 3^rd quarter news for hotels which will keep the loyalty bargains going for consumers?

Occupancy nationwide is just over 60.5% for the third quarter. These were the summer peak tourist season travel months of July, August, and September. The decline from last year was nearly 8%.

Average room rates for US hotels during these months dropped nearly 10% from last summer to $96.84. Considering the budget and economy sector hotels are already at rock-bottom rates with bare-thread profit margins, one would expect the declines are disproportionately due to drops in the midscale to upper-upscale/luxury hotel market.

The hotel industry in some locations like Houston (52.3% occupancy), Dallas (52% occupancy), and Phoenix (44.8% occupancy) is struggling with an over-supply of rooms for the current market conditions. Look for loyalty program offers. Phoenix has had some amazing discounts with hotels like the Fairmont Scottsdale offloading rooms for under $100 a night.

Hotel rates in New York City have fallen over 25% since last year. Sure there are some incredibly pricey hotels for some dates, but savvy shopping can uncover some knockout deals through Priceline, SkyAuction, Hotwire, and other outlets if you just want a fancy hotel at a bargain price without the loyalty amenities.

Denver, Colorado has been a great loyalty program destination for me over the past year. Rates in the mile-high city continue to plummet with a 21.3% decline year-over-year in the average room rate to just $90.72. Those loyalty program promotions offering a free night for two stays are the route to cheap luxury vacations in low-priced cities like Denver, Houston, and Phoenix.

Currently Hyatt is the only hotel loyalty promotion still offering free nights for every two stays through January 31. As the nation gears up for holiday family travel over the next two months, think about planning some hotel stays with high value. Spring vacation 2010 may still be pushing rates high in resort destinations. Shop now for the bargains, earn some points, miles, and free nights, and enjoy 2010 in the luxury of your own free hotel room.

Here is a snapshot graph I saw today of global hotel rates and occupancy by region from the STRGlobal website. While I have not been out of the USA much these past two years, my Loyalty Traveler strategies for vacation travel developed over the past decade due to the low cost of earning hotel points and free nights from stays in the US and redeeming most of my points and free nights in other countries where hotel rates are much higher.  

http://www.strglobal.com/News/News.aspx

STR Global Hotel Index 10-28-2009

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.