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.”

 

U.S. Lodging Markets	Greatest and Least 2009 Forecast Decline in RevPAR*
Market	Decline
Pittsburgh	-6.8%
Houston	-6.9%
Raleigh	-7.5%
New Orleans	-7.9%
National Average	-13.7%
Charlotte	-18.7%
Miami	-19.1%
Phoenix	-20.5%
New York	-26.1%
Source: PKF Hospitality Research

* 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.

Hotel News Now published a story on “10 hotel booking trends” from a presentation at the inaugural Hotel Data Conference by Brian Ferguson, Expedia VP of Lodging Demand and Analysis. Hotel News Now is the newsletter publication of Smith Travel Research, a leader in hotel rate data and research for the hotel industry.

The consumer trend of the past year has been a swing in hotel bookings made through online third-party hotel reservation sites like Expedia, Travelocity, and Orbitz. The viewpoint of Expedia, expressed by Ferguson, is the increased volume in bookings does not directly increase profits for third party online travel agencies due to the lower revenue generated as a portion of lower room rates across all hotel market segments.

What I want to share is the “10 Booking Trends” discussed by Expedia’s Lodging Demand and Analysis VP. I am just a hotel consumer who tries to figure out how to get great value from hotel rates. Reading what the industry experts have to say helps me focus my Loyalty Traveler work on a targeted audience who will benefit from my reporting on hotel rate trends as a frequent guest.

1.       Expedia VP Ferguson: Exchange rates are shifting travel patterns.

Hotel rates in UK have dropped primarily due to the better exchange rate for Americans. Combine the exchange rate with promotions and the UK is a bargain.

Loyalty Traveler: I totally agree, but the window appears to be closing on the exchange rate issue. Winter 2009 offered some of the best deals in years for UK and Europe due to the combination of a much better exchange rate for the US Dollar and hotel loyalty program promotions. The dollar has been losing ground as the stock market goes up. Anyone thinking Wall Street inflation?

2 nights for the price of 1 has been an ongoing deal for the past couple of years to entice travelers to the major chain hotels in Europe and Asia.

2.       Expedia VP Ferguson: Consumers are looking for a deal. Bookings made with promotions are increasing as a share of total hotel reservations.

Loyalty Traveler: I’ll take some credit for this one. I take the time to analyze hotel promotions for readers. Loyalty Traveler rarely books a room without a promotion offer. “Hotel value for the frequent guest” is the Loyalty Traveler motto. 10,000+ unique visitors a month are reading Loyalty Traveler to learn more about hotel loyalty program promotions.

3.       Expedia VP Ferguson: Promotions matter more than ever.

 

Loyalty Traveler: I get a chuckle out of all the news articles showing how to get better value from your spending in all segments of consumer purchases from groceries to hair cuts to travel.

I had an oil change yesterday for 25% off. The coupon took two minutes to locate on the internet. All the other people at Jiffy Lube paid full price.

Friends have commented I am a cheap ass when I pull out a 2-for-1 dining coupon. I rarely eat out for more than half-price.

 

I frequently stay in hotels for less than half-price. Promotions matter if you want more money for life’s other necessities and pleasures.

 

4.       Expedia VP Ferguson: Promotions are getting more creative. It used to be about cutting rates and now hotels add free nights and value-added incentives.

 

Loyalty Traveler: Promotions are more creative and take more time to analyze for this Loyalty Traveler. I’m looking for the deal whether it is a bargain rate now (free parking, free breakfast) or will result in a bargain hotel rate in the future (free hotel night).

 

5.       Expedia VP Ferguson: Customers who book online are trading up. Four and five star hotels are getting more affordable.

Loyalty Traveler: I have stayed in some of San Francisco’s finest hotels this year and only once paid over $125. And I received a $500 per night suite for that stay. 2009 is a leisure traveler’s hotel dream.

6.       Expedia VP Ferguson: There are massive swings in online market share.

Loyalty Traveler: No real comment to make here. I haven’t tried the phone call reservation this year. I’ve read articles on Hotel Chatter and Budget Travel about people getting a much better deal through the phone. I’ve been an online customer for 10 years and my experience has rarely been to find a better deal over the phone. I do recall my mother getting good phone rates when my mom and the hotel reservationist could not locate the online promotion I was telling her to book.

7.       Expedia VP Ferguson: Booking compression. People are waiting closer to stay date to book.

Loyalty Traveler: I reported in several posts that my rate analysis of San Francisco hotels revealed the lowest rates typically are found between 7 and 14 days before the stay date. Smart shoppers wait (or at least go with a rate allowing cancellation in case a better rate appears).

8.       Expedia VP Ferguson: Leisure rates went down first and are going down more.

Loyalty Traveler: My hotel rate focus is geared for the leisure traveler. I don’t stay in San Francisco on paid rates when a convention is in town and the hotels go up to $300+ per night. The same hotel room is around $100 per night, a 50% decrease from average leisure rates a year ago, during weeks when business travel is light. And getting an upgrade is much easier when there are not corporate executives buying up the suites.

9.       Expedia VP Ferguson: Increased use of rate fences in packages.

Loyalty Traveler: I am not a marketing person and I need to study this concept since I have been seeing it more frequently lately. Basically it seems the concept is to hide the room rate in a package of bundled services such as airfare, rental car, or hotel amenities like champagne and spa treatments.

I generally find these to be a poor value for a hotel when the components are broken down. Packages are convenient and there are some great deals if you need the car or the airfare. I think this is generally a better strategy for reducing high-cost airfare rather than getting a better value on a hotel room.

10.   Expedia VP Ferguson: Opaque channels are growing faster than non-opaque channels.

Loyalty Traveler: Opaque channels are hotel reservation sites like Priceline and Hotwire where you get a really low rate for an unspecified hotel. Opaque channels are the way to go when hotels are priced at high nightly rates. I opt for Priceline when the alternative is a $200+ night room.

My basic loyalty traveler argument is over the course of the year when traveling and staying 20 to 50 nights in hotels, the hotel loyalty program strategy can be used as effectively as Priceline to pay for rooms when they are relatively low priced and redeem points for high priced rooms.

I have saved a couple thousand dollars in past years using Priceline for trips when the chain hotels were high priced.

2009 has seen incredible promotions from hotel loyalty programs. My Starwood Hotels stays in May averaged less than $60 per room night at upscale hotels, frequently in suites, while allowing me to book $500 per night rooms with the free nights I earned.

Try doing that with Priceline.

 

 

Popularity of Chain-Affiliated Hotels Waning?

A national travel survey 2009 National Travel Monitor by Ypartnership/Yankelovich states travelers have increased preference for independent hotels by 6% over the past year. The chain-affiliated hotels do not need to fret too much as 4 out of 5 leisure travelers still prefer brand name hotels, but the survey indicates a growing preference for the individual character and pricing of independent hotels.

 

Leisure travelers also state a growing preference for limited-service hotels, i.e. hotels without restaurants, over full-service hotels since the 2008 survey conducted by this group. Room rates play a large role in the growing popularity of the limited-service hotel. Also, the perception of better value is a leisure traveler concern.

 

Still the leisure traveler preference for full-service hotels has only dropped from 66% in 2008 to 60% in 2009 while limited-service hotels have grown in popularity from 34% in 2008 to 40% in 2009.

 

As Loyalty Traveler I find the interesting data point in this survey to be a preference for chain-affiliated hotels at 80%, yet brand name is cited as a “very influential” factor in choosing a hotel for just 44% of respondents.

 

Does this mean travelers want a chain-affiliated hotel for consistency in lodging, but do not care which brand?

 

This indicates to me that leisure travelers are not taking advantage of the full array of benefits from hotel loyalty programs. Readers of my blog know there is real value in working a loyalty program for complimentary upgrades and free nights. I meet so many people who spend 20 to 30 nights in chain-affiliated hotels every year, but rather than being loyal to one major hotel chain and gaining elite status, the desire to get the lowest rate splits their loyalty among the chains.

 

The result of scattered hotel loyalty is small amounts of points in a variety of hotel programs and no elite status. The trade-off of several  hundred dollars saved over the course of the year is often at the expense of a couple of thousand dollars in potential benefits missed due to no hotel loyalty elite status.

 

A $200 savings for a 5-night vacation at a Marriott resort may be a savings for one trip, but it is not the best value if the traveler could have had a $200 per night complimentary upgrade at the Hilton resort across town based on Hilton Diamond elite status.

 

Many leisure travelers have enough hotel activity during the year to reach a high elite status, particularly with Starwood Preferred Guest or Hyatt Gold Passport (hey, Hyatt is giving away top elite status for free right now with complimentary upgrade certificates).

 

Year after year, I watch fellow travelers going after the best rates without consideration of the potential added value they would receive if they just focused on a single major hotel chain. And they spend thousands of dollars on hotels over the course of the year and could easily put out a few hundred dollars more to maintain high elite status.

 

I’ve had friends come and see my hotel room and they wonder why I didn’t tell them about the great hotel deal. “I would have stayed here for that price!”

 

Complimentary room upgrades don’t come with two or three hotel stays a year with a major hotel chain. Demonstrating loyalty means a commitment to spend thousands of dollars over the course of 15 to 30 hotel stays during the calendar year. In my case I feel the loyalty is returned by the benefits I receive from the hotel loyalty program.

 

Complimentary upgrades are based on showing hotel loyalty to the affiliated hotel chain. It is a win-win relationship. The hotel chain has my loyalty and I frequently receive value-added benefits for my hotel spending.

 

Room rate, location, and value are cited as the most important factors by leisure travelers when booking a hotel room.

 

Room rate is quite important for most travelers. The basic practice of setting room rates based on the hotel’s market segment competition means most major brand upper upscale hotels in the same area will have a similar price. The room rate variations are typically due to events and functions that will push rates higher for one hotel over another. With no special events creating higher hotel demand, then room rates are typically within a 10% range above or below an average of the hotels in a particular market segment in a specific location.

 

When location is most important and room rates among chains within a specific location tend to balance out, then value is left as the primary variable. Hotel frequent guest programs provide the added value in complimentary breakfasts, room upgrades, and future hotel room rebates in the form of points and free nights.

 

Frequent guest elite status in a major hotel chain’s loyalty program improves the value variable. Rather than downgrading your hotel market segment, try upgrading your hotel loyalty.

 

 

 

 

 

 

 

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

The bottom line for the hotel traveler is “How much will my room cost?”

I read a post on *Wood blog about the Mobil Five-Star Award conferred upon the St. Regis San Francisco recently.  I then noticed yesterday the lowest rates I’ve ever seen for the St. Regis San Francisco. 

St. Regis San Francisco, Metropolitan Suite

A spreadsheet I made in August 2007 for hotel rates in San Francisco allowed me to make a comparison to current hotel rates and illustrate the impact of the current economy on the high end hotel market.

San Francisco hotel rates are typically lower during holidays due to the central business district location of most major hotels.  Labor Day weekend rates in 2007 were near the low rates for the entire year from my observations of hotel rates in San Francisco.  There is a certain amount of rate fluctuation due to seasonal rate adjustments with February being near the lowest rate month for San Francisco, however, rate decreases year round are typically tempered by frequent conventions and conferences in the city.

I made a comparison of rates for same hotels for February 13-16, 2009 with the Friday-Monday Labor Day 2007 weekend. Rates for several high-end Starwood hotels were checked on August 22, 2007 for the 3-day Labor Day weekend Friday, August 31-Monday, September 3, 2007.  Several rate types were checked including group rates like AAA and senior rates, hotel special offer rates, and Starwood multi-night discount rates. 

In general, the lowest rates for the Valentine’s weekend 2009 are typically found using Starwood Hotels special rate offer for the Third Night Free on a weekend stay. 

 

St. Regis San Francisco, SPG Category 6
	Deluxe Room	Grand Deluxe	Executive premier	Astor Suite	Metropolitan Suite
February       13-16, 2009         (3-night stay)	$227/night internet rate	$313/night  (average rate with 3rd night free)	$339/night  (average rate with 3rd night free)	$400/night  (average rate with 3rd night free)	$600/night  (average rate with 3rd night free)
August 31-Sep 3, 2007 rates	$331/night	$459/night	$489/night	Not Listed	$945/night

St. Regis did not offer the 3^rd Night free rate for 2007 stay.  Rates shown for 2007 were either nonrefundable internet rates or hotel special offer rates. Rates are generally 30%+ lower in 2009.

W San Francisco, SPG Category 5
	Spectacular Room	Cool Corner	Fabulous Room	Fantastic Suite	WOW Suite
February       13-16, 2009         (3-night stay)	$153/night (average rate with 3rd night free)	$173/night  (average rate with 3rd night free)	$199/night  (average rate with 3rd night free)	$460/night  (average rate with 3rd night free)	$1,150/night  (average rate with 3rd night free)
August 31-Sep 3, 2007 rates	$229/night	$259/night	$289/night	Not Listed	Not Listed

Peculiar Starwood clause in the room description for a Fantastic Suite: “700 Square ft, Floors 23-28, unobstructed views, No Parties or Meetings Allowed!”  Rates are about 30% lower in 2009.

 

Palace Hotel courtyard restaurant, San Francisco

The Palace Hotel, San Francisco, SPG Category 5
	Superior Room	Deluxe Room	Grand Deluxe Room	Junior Suite	Superior Suite
February       13-16, 2009         (3-night stay)	$119/night special offer	$129/night  special offer	$173/night  (average rate with 3rd night free)	$159/night  Special Offer	$459 Grand Deluxe Suite special offer
August 31-Sep 3, 2007 rates	$229/night	$259/night	$289/night	$250/night Special Offer	$275/night Superior Suite Special Offer

The Palace Hotel has dropped rates near to 2006 levels when the hotel was still going for as low as $99 on slow weekends.  2007 and 2008 rates hovered around $200 for the lowest category rooms.

The $159 rate for a Junior Suite is quite a discount on average rates at the Palace over past two years.  Rates are generally 30% to 50% lower in 2009.

Le Meridien room category types have changed so much in the room descriptions that I can’t easily match room descriptions now with descriptions from 2007.  

Christopher Elliott wrote a recent article, The Disappearing Vacation, where he coins 2009 the year of the ‘naycation’, as in No Vacation for 2009. 

The numbers are looking bleak, particularly on the luxury front of air travel.

Premium air travel fell 11.5% worldwide in November 2008 compared to November 2007, according to a New York Times article yesterday, January 20, 2009.  The greatest decline is in long-haul travel.  Those $15,000 to $20,000 ticket prices finally seem to be an inhibitor to flying up front for the moneyed corporate masses.  (I refer to corporate masses from my experience of having traveled on dozens of premium flights and never having talked to someone seated next to me in the premium cabin who paid for their own flight.  Corporate travel or frequent flyer award travel is common.)

Trans-Pacific premium travel suffered nearly an 18% drop in November 2008.  This might be a good time to try and score a First Class award ticket on a trans-Pacific route.

Trans-Atlantic premium flight travel to Europe dropped 9% in November over the year before. 

And the airline industry forecast is for the travel market to decline further before an improvement is seen.

On the hotel front, luxury hotel travel has dropped 24% from a year ago in recent industry tracking data.

Chris Elliott commented in his ‘Disappearing Vacation’ piece “No two ways about it, staying close to home and exploring the local attractions can be dull. (Unless you live in a place where people like to vacation.)”

Lone Cypress, Pebble Beach 1-18-09

Pebble Beach, Western Edge of California, Eastern Edge of the Pacific

I do have the good fortune to live in a place where a staycation is still a great time.  When traveling and asked where I am from, I regularly describe where I live, Monterey/Pacific Grove/Pebble Beach/Carmel, collectively known as the Monterey Peninsula, as the place in California where Californians vacation.   

We spent the day basking in the sun and whale watching at Pebble Beach this past weekend.  The best whale watching from the shoreline I have seen in my life has occurred the past two weeks.  The Monterey Peninsula has had the longest winter heatwave in almost 50 years.  The temperature in Monterey has exceeded 70 degrees for the past 9 days and on Monday, January 19 the temperature peaked out at 80. The last time the Peninsula saw this kind of winter extended warm temperatures was January 1962.

Cypress Point, westernmost point of Pebble Beach, looking south to Point Sur

I rag on the exclusivity of Pebble Beach, but I have to admit the scenery is damn beautiful and the whalewatching from Cypress Point was the best location on the Peninsula I have been in the past two weeks for close views of whales from the shore. Some whales were within 1/2 mile of land. 

The $9.25 entrance fee to the 5,300 acre privately owned and gated community on the western edge of the Monterey Peninsula keeps me from visiting the area as frequently as I would like.  Bicycles may enter Pebble Beach without charge for the cycling alternative.  I need to get a bike.

Pebble Beach will have the ATT Pro-Am golf tournament in two weeks.  The hotels need the revenue.  Pebble Beach, feeling the pinch of luxury travel cuts, has shed employees, shut down restaurants on Sundays, and offered discounts on room and golf/spa packages for their three hotel properties: Pebble Beach Lodge, Spanish Bay, and Casa Palmeiro.

The Lodge at Pebble Beach, view from near 18th green of Pebble Beach Golf Links

Still, Pebble Beach Corporation has posted rate increases for April 2009.  An ocean view room at the Pebble Beach Lodge will increase more than 4% from $925 to $965 per night.

The Lodge at Pebble Beach, Oceanview rooms

The rooms above look over the 18th green of Pebble Beach Golf Links and Carmel Beach is in the distance.

Pebble Beach Golf Links, 18th green, a view from oceanview rooms at The Lodge

Is $965 for a night at a California coastal resort feasible in this economy? 

Time will tell if this luxury retreat on the Monterey Peninsula will continue to see a retreat in luxury for 2009.

Loyalty Traveler tip: The $9.25 car admission fee to Pebble Beach will be deducted from your restaurant or bar bill if you visit one of the Pebble Beach restaurants, bars, and cafes.  A bottle of Stella Artois will run $7.25 at Traps in Spanish Bay Inn and appetizers are $10-$20; Peppoli restaurant entrees are $30 to $50.  The Lodge has similar prices.

 

Spanish Bay Inn, bagpiper at sunset

I am on a lonely road and I am traveling,

traveling, traveling, traveling,

Looking for something, what can it be?

    

    All I Want –  Joni Mitchell

 

Mt. Shasta, California view from I-5 near Dunsmuir

 

I heard a blogger panelist at BlogWorld08 in Las Vegas tell bloggers never to apologize for not blogging.  I’m not apologizing – just writing.

 

I was on the Family and Friends plan this past week over the Thanksgiving holidays.  I have hotel reviews, stories, and photos from Las Vegas for Loyalty Traveler December blog posts.  There are still several pieces of the Vancouver, Washington, Oregon, and California trip I want to finish writing and posting to this blog. 

I drove around the western states for most of November.  It has been 12 years since I did serious road travel.  My realization this past month is writing as a road warrior is much more difficult than writing when flying the friendly skies.  Piloting and navigating a car takes a lot more physical and mental energy than being a high flyer drifting between airports penning thoughts.

Most of my November days were used seeing hotels (about 25 hotels or so), staying in hotels (11 stays), and driving between hotels (3,500 miles).  Gas dropped from $2.94 to $1.81 over a three week period of driving around California and the west.  Hotel prices also dropped by 35% in many locations from the time I started looking in mid-October/early-November to when I was booking rooms during November.  Airfares for domestic December holiday travel are some of the lowest fares I recall seeing in the past 7 years.

The new Starwood Luxury Collection hotel, the Nines Portland, Oregon has dropped rates as low as $149 for Christmas week.  This is 40% less than lowest rates were 30 days ago.  Recently opened hotels like the InterContinental Monterey are currently offering abnormally low rates like $117 per night (AAA rate) for an upscale hotel in a resort destination.

I was checking Denver hotel rates for stays around Christmas week and the Hyatt Regency and Grand Hyatt in downtown Denver are only $70 a night.  I am astonished and thankful.  Hyatt Gold Passport Faster Free Nights makes hotel rates this low essentially freebies.  A Hyatt Gold Passport member can stay upscale in downtown Denver at economy hotel room rates and redeem luxury hotel nights in a place like Scottsdale’s Hyatt Gainey Ranch Resort or a Park Hyatt for free during winter 2009.

I think we have about two to three weeks before the 2009 hotel promotions appear on the web to try and stimulate the hotel economy.  Hotels are mirroring the national economy in needing a jump-start to keep rooms occupied in 2009. 

Hotel industry news throughout November has repeatedly shown occupancy declines, luxury and upscale hotel market room rate cuts, and average room rate declines across the USA, although Texas hotel rates are rising at the moment. Forecasts offer an even bleaker 2009 hotel industry scenario.  Projects like the St. Regis Las Vegas and new Starwood hotels in Macau are postponed indefinitely.   

Much of the hotel industry occupancy projections in 2008 and into 2009 were based on increased international visitors to the USA.  The dollar was weak and the British pound and Euro were strong and made the USA a bargain destination.  Many international currencies have lost 20% to 30% of their value against the dollar since September and the likelihood of large increases in the numbers of international visitors to the USA has diminished.  The Mexican peso and Canadian dollar have plummeted against the US Dollar taking away the financial incentive and the financial resources for USA travel from our top two sources of international visitors. 

Time-Rich, Job Poor?  Go Travel!

Work interferes with seeing the world.  This is a great time to travel and see the world.

There are travel deals all around.  Last week, Holland America offered an inside cabin for $1,025 per person on a 16-day San Diego to Fort Lauderdale cruise via the Panama Canal.  A 16-day cruise for $2,050 all-in, including the fuel surcharges for sailing next week December 7.  $125 per day for a room, entertainment and recreational activities, and all the food you can eat is a great deal. 

 

Luxury Hotels – “Show me the Discount”

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.

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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.

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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 .

 

 

 

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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