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

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

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

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

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

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

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

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

Not Enough Time or Money or Both

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

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

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

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

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

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

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

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

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

Brokeass Mountain Road Trip, July 2011

Monterey, California – Denver, Colorado

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

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

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

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

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

So what about the leisure traveler?

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

Blame the oil dip stick for New Orleans woes!

The good news?

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

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

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

Sources:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Infinity spa pool, Post Ranch Inn, Big Sur

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

STR Global Hotel Index 10-28-2009

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

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

So why are hotel loyalty programs being so generous?

And why are loyalty travelers so happy?

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

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

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

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

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

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

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

And occupancy levels are still declining around the US.

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

And occupancy levels are still declining around the US.

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

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

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

December 2008

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

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

February 2009

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

March 2009

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

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

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

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

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

* March 2009 Hotel Horizons Report

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

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

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

April 2009

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

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

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

May 2009

Luxury Hotels Room Rates Drop

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

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

June 2009

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

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

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

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

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

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

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

July 2009

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

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

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

September 2009 – The Current Situation in the US Hotel Industry

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

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

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

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

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

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

Hotels and the Loyalty Traveler

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

Loyalty travelers are loyal.

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

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

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

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.

St. Regis San Francisco "Priceline may be cheap, but this room was free"

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 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.

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 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