Front Desk

It's Summer. It's Time to Push Hotel Rates

As we look ahead to this weekend's Memorial Day holiday, the focus for many hoteliers is the upcoming summer travel season, the time when most Americans travel for leisure. A lot of people in the tourism industry have been on pins and needles as they look into their crystal balls to divine what's ahead between now and Labor Day. I don't want to jinx it, but it looks to me as though all systems are go for the biggest summer travel season since before the start of the recession.

Despite all the gnashing of teeth earlier this spring, it appears gas prices actually won't be much of a factor in many travel decisions. Those who do still fear the price of a gallon of gas may decide to downgrade some part of their vacation experience—perhaps moving down one price category of hotel—but my hunch they will still take to the road for family fun.

In recent summers, the buzzword was staycation—the notion that consumers would forego traditional car or airplane trips for a week of barbequing in the backyard coupled with day trips and visits to local museums, amusement parks, etc. Despite the chatter in the media about this concept, I get the feeling not many families went this route back in 2009 and '10, and many fewer will do so this summer. The latest wrinkle in this non-trend is the nearcation, a concept mostly being promoted by the indoor waterpark hotel industry to spur travel this year. Great Wolf Resorts has been promoting the term as a way for families to get a vacation without worrying about high gas prices. The company says 42 million people live within 300 miles, or just about a tank of gas, of the company's 10 resorts. It may not be the most innovative marketing hook I've seen in the hotel industry, but it may work for them.

The best news for hoteliers this summer is part of a much larger trend in the industry. It's that staple of economics: supply and demand. Since new additions to the industry's supply of hotel rooms are scarce and will remain scarce for the foreseeable future, and demand this summer appears to be robust, hotels will have the best opportunity in a long time to raise rates. It's already happening. According to STR, during the week of May 6-12, occupancy was flat but rates were up more than 4%. That's a very healthy sign.

I anticipate a strong summer for the industry, so it's time to make sure your rate structure is positioned for maximum profitability.

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