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. 

I like numbers. Mathematics was boring to me until I hit the subject of statistics in college. Proportions and probabilities really have some meaning in masses of people. Sometimes it is good to stick with the masses and other times the better road is the one you take alone.

My travels tend to be the alone type. Not always though. Alone together traveling with my wife is more methodical travel, yet still generally a cool experience too.

The man who goes alone can start today; but he who travels with another must wait till that other is ready, and it may be a long time before they get off.”  – H.D. Thoreau – Walden (1854).

Travel, American Style

140,000,000 Americans plan to travel this summer. That is nearly half of Americans in the country.

The average travel spend for summer is $1,180 per person. I look at that amount of spend and think that is a fair travel budget for one person. I can travel for one to two weeks on that and likely stay in some $200 per night hotels using hotel points I earned from earlier hotel travel.

$300 for gas in my car in the USA gets about 2,000 miles of travel distance. $880 for food, activities and other for 7 to 10 days looks reasonable when using hotel loyalty programs to pay for half the travel with points and earn some more bonus points with about $400 in hotel cost and about $200 in food. That leaves about $40 per day for any other stuff.

$1,200 for a week of travel in a car or on a plane (assume $300 airfare + baggage for U.S.) is traveling on a budget.

$2,400 or Honey, I’m busting the budget.

The average travel budget really is set at an amount around $100 per month per person traveling. This seems sufficient for a comfortable 7 to 14 day summer vacation once per year.

Setting $200 per month aside to travel once per year is something many of us find extremely restrictive to our American and global movement lifestyle. Either because you can’t afford $200 per month every month to set aside for a travel budget or the fact that $200 per month comes nowhere close to meeting your desired travel objectives.

I fall in the latter camp of travelers. I like to travel about 8 to 10 weeks per year.

Rather than saving to build a travel budget for a couple of vacations each year, I distribute my spending throughout the year to earn points and miles.

The cost of nearly every trip is reduced by booking the best value combinations of paid stays to earn high value loyalty bonuses at hotels and redeeming points earned from previous transactions for free nights at hotels where rates are higher than I want to pay.

Los Angeles on $500 per week

This kind of strategy allowed me to drive 800 miles from Monterey to Los Angeles and back last month with 7 hotel nights and spend less than $500 for the week including the thousands of points I spent with my Wyndham Rewards, Priority Club and Starwood Preferred Guest hotel loyalty points.

64,000 Wyndham Rewards points purchase in 2011 Daily Getaways = $200 cost to save $400 on four nights at Ramada Convention Center.

5,000 Priority Club points in 2012 Daily Getaways cost $30 to save $110 at Holiday Inn Express Simi Valley. I didn’t buy Priority Club points this year. I am still spending my Crack the Case 100,000+ points from 2011 I earned for about the same $30 per 5,000 points rate while staying at IHG hotels in 2010 and 2011.

7,000 SPG points = free cost through 70,000 points in new member referral bonuses I earned in 2010 to save $300 for one night at Four Points Los Angeles Westside and one night at Four Points Ventura.

Destination Popular: Florida, California, New York and North Carolina

The most popular destinations for summer travel in U.S. this year according to an American Express survey:

• Florida = 19%
• California  = 15%, up from 8% last year.
• New York = 10%
• North Carolina = 9%
• 19% of travelers plan to use loyalty miles & points for 2012 summer travel; up from 15% in 2011.

Travel – International Style

The most popular destinations for summer travel in U.S. this year according to an American Express survey:

• Cayman Islands (7%)
• Italy (7%)
• UK (6%)
• Among affluent travelers Italy (10%) and UK (11%)

The Euro Crisis Opportunity for Travelers

Hotel News Nowreports southern Europe is experiencing declining rates in Greece, Spain and Portugal. Several studies cite rate drops in Portugal.

Marriott presence all around Spain and Portugal

Lisbon Marriott is under $100 per night for midweek July 2012. And I am sure the experience and service in Lisbon exceeds your typical $100 per night Fairfield Inn or Courtyard.

Marriott bought Spanish hotel chain AC Hotelsa couple years ago and there are now 78 Marriott brand hotels in Spain, many AC Hotels having rates under $100 per night.

Egypt – can these hotel rates get any cheaper?

On the strict numbers game and hotel value, the 2011 uprising in Egypt made what was already one of the least expensive countries in the world to visit and stay in upper-upscale and luxury hotels an even better deal for tourists.

Sure, Egypt is really hot in summer. Heat does not stop tourists from visiting Las Vegas in summer and I bet the swimming pools at hotels in Egypt stay open late into the evening, unlike Vegas.

Living in the Past, and planning for the future.

My travel budget has never been more than spending the minimum I can get away with while maintaining reasonable safety and comfort standards. My wife and I traveled for five weeks in 1997 to Ireland and Scotland in TWA economy and RyanAir (before RyanAir) even sold tickets online. We had our emerald isle guid to the Ireland’s B&Bs and we typically stayed 3 to 4 nights in each house around County Donegal and Northern Ireland, exploring the surroundings  and riding public busses around the countryside. The cost  was about $6,000 for everything related to the trip.

Six years later in 2003, after four years of earning miles and points in frequent flier and hotel loyalty programs, we flew British Airways First Class to London, spent a week hanging out in a Hilton hotel for free on points, flew to Melbourne, Australia via Singapore. Again in British Airways First Class.

We stayed 11 nights in Australian Starwood Hotels in Melbourne, Sydney and Brisbane spending about $1,900 on the hotels. We earned 110,000 Starpoints for 10 hotel nights on published rates.

The value of those 110,000 Starpoints provided something like $5,000 in free and discounted hotel rooms during our travels over the next couple of years.

We flew one-way Qantas flights around Australia with each ticket less than $100 all-in and earned American Airlines miles for the flights. We returned to London after two weeks in Australia, again British Airways First Class.

Jaunted over to Amsterdam for another week and another free Hilton Hotel stay. We burned 300,000 airline miles for six First Class long haul flights on British Airways over a 31-day trip in July.

We stayed about 16 hotel nights for free using hotel points and we paid for 12. We slept on planes several nights. All in all we earned $5,000 in hotel points for under $2,000 in paid hotel stays that trip. We traveled 31 days for about $5,000 for everything related to the trip.

And when we returned home we soon received in our hotel loyalty accounts 110,000 points for about $5,000 in future Starwood hotel travel.

Oh yeah, we also unexpectedly received at least $200 in Tumi gift certificates. I use my Tumi camera bag regularly to this day.

What’s the point?

Just saying, there are travel opportunities to get you around the USA on a $1,200 budget for a good two weeks of travel in nice hotels by yourself or with another.

And with some airline miles to get you overseas on the cheap, then your travels can include global experiences without busting your annual budget.

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

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

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

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

The hotel industry strategists urged full steam ahead in early 2008 when faced with any discussion of a world recession and that “d” word.  I am talking about “discount” room rates. 

Shhhh. 

The “d” word can’t be spoken too loudly inside the hotel industry.

Wall Street and the hotel industry have been taking a bath with our cash for five years.  Except for the slight downturn in 2001-2003, hotels have been raising the cost of rooms every year for the past decade and now they are through the roof…or at least to the 7^th floor.

I am not Jerry McGuire.  You can yell “Show me the money!” all you want. 

I’m yelling back, “Show me the discount!”

We need a win-win negotiation here.

I rant on and on about the high cost of hotels.  In a world where many leisure travelers and business travelers have watched their retirement tossed out with the bathwater in 2008, the discussion in the hotel industry that rate increases will have to be moderated this year just pisses me off.

You have to wonder how bad things really are when you watch your savings portfolio crash 20% in a week.  

What the hell.  Go traveling.

All year long the industry talk in the media has been how luxury travel is immune from the economic downturn. 

Several articles I’ve read in the past twenty-four hours suggest the media is peddling a different tune in Black October 2008.

·          

Some people don’t just travel , they travel well…

well, expensively.

The Miami Herald ran a story October 8, “South Florida Luxury Hotels Tested in Hard Times”. The Setai Hotel, South Beach, Miami has standard room rates of $1,100 per night.  The sales director says room rate discounts to $620 per night, normally only offered for weekdays, may have to be offered on weekends this  winter season to attract guests.

I am thinking European repeat visitors to the USA may now feel what Americans have experienced in trips to Europe and many other countries where the US dollar declined in value over the past few years.  1000 Euros is only worth $1,368 today, about $200 less, or 13% less than it was three months ago ($1,574 July 9, 2008). 

Miami has had several new luxury hotels open in the past few years with all the major chains buying a piece of the real estate.  Fort Lauderdale has Starwood’s new W Hotel, and the St. Regis Fort Lauderdale rebranded as a Ritz-Carlton, a Marriott hotel .  Hilton has the Fort Lauderdale Beach Resort and Miami has two InterContinental hotels. 

Luxury hotels are abundant in south Florida.  This location may be the bellwether location to watch for luxury hotel trends in 2009.

·          

The Wall Street Journal has a good read on Caribbean hotel discounts, “Silver Lining for Vacationers in the Caribbean,” by Sarah Nassauer.  The article states Puerto Rico hotel rates are down 11%, and Punta Cana on the Dominican Republic is down 16% from this time last year.  The Caribbean may be like 2005 was for housing.  Signs of a turbulent hotel elevator ride ahead. 

Last month I blogged about the global hotel report by Smith Travel Research showing the Caribbean had the only decline of average room rates over the past year.  Airline service cuts, higher airfares with all the fuel surcharges, and already over-priced hotel accommodations have led to tough times. 

·          

And winter 2009 should be worse I predict.

The Europeans and foreigners with stronger currencies than the dollar helped boost tourism in Caribbean locations with European ties.  European visitors to Aruba in the Netherland Antilles have seen the Euro drop 13% against the US Dollar in the past three months.  And the US Dollar is the major transaction currency for hotels in the Caribbean. 

A 5% hotel room rate cut to $400 per night for a Caribbean beach resort in November 2008 will still cost $50 more per night for a Euro-spending European than it was in July 2008.

·          

Joe Sharkey’s New York Times article, “ Travel Industry Shaken by Economic Downturn” cites patterns of luxury travel decline.  British Airways, the grande dame of European luxury air travel, has seen almost a 9% decline in the past year for its long-haul premium travel.  Even Singapore Airlines is offering premium flight discounts as the tiny financial powerhouse island-country of Singapore joins New Zealand as the second major Asia Pacific country to officially go into economic recession. 

Upscale hotels are impacted too.  Sharkey’s article cites Bjorn Hanson, New York University professor at Tisch Center for Hospitality, saying hotel cancellations for full-service hotels have been running about 50% above normal for the past two weeks.

·          

Pebble Beach Lodge and Golf Resort sent me a special offer for two nights with two rounds of golf and a complimentary room upgrade starting at $2,000.  I guess they didn’t read my blog post, “$8 Cups of Beer!  Pinch me, I’m Luxuriating,” written after the ATT Pro-Am last February.  (I changed the title last month to “Monterey County Luxury Hotels” to enable better search engine optimization.)

If you want to learn more about the Pebble Beach offer you can call 1-800-877-0279 and ask for code “PGECP8”.  Book by October 21 to get the added bennies.

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Ritz-Carlton Spa and Golf Resort, Half Moon Bay, California

And then there is the AIG fiasco last month at the St. Regis Monarch Beach in Dana Point, California.  I was interested to read in the LA Times yesterday, David Lazarus’ Consumer Confidential, that AIG had another company event planned for the Ritz-Carlton Resort in Half Moon Bay, California next week. 

I was thinking we could organize a beach blanket protest using the California Coastal Commission’s public access to the beach (explained here) for some consumer advocacy and fun in the sun.

The cancellation of the AIG event at the Ritz-Carlton Half Moon Bay was just announced this morning.  Power of the media.  Power to the people.  Our tax dollars shouldn’t be funding golf excursions.

Attention AIG executives!

Loyalty Traveler has a great tip for a Pebble Beach golf getaway – but, please pay on your own dime.

And this takes us back to the downturn in luxury travel.

$500,000 luxury meeting getaways will likely be scaled back dramatically over the next year as this financial crisis winds its way through the travel industry in 2009.

·          

The good news? 

Loyalty Travelers will find hotel bargains in 2009.

Hotels are looking more to consumer groups for targeted hotel rate discounts. 

My wife just turned 50.  She was surprised I hadn’t gift-wrapped an AARP card for her birthday present.

Honey, I think I have already picked out your Christmas gift .

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

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

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

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

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

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

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

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

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

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

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

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