Front Desk

Rating Your Options

A recent story in USA Today, titled "With recession looming, high-end lodgings offer luxe for less" suggested many high-end properties are getting creative in their marketing, and in some cases, cutting rates. A story earlier this week in the New York Times, "Dim Days for Luxury Hotels" hit on the same topic.

Cutting rates, everyone says, doesn't drive occupancy and only lowers revenue. That was the lesson learned in the last down cycle after 9/11. Owners and companies are facing the same challenge again, from top to bottom. Hotels of all shapes and sizes are getting creative with special offers and marketing gimmicks to avoid cutting rates while still attracting business: two-for-one sales, stay three nights for the price of two, gas cards, gift cards, free spa treatments, etc. Is it working? Can it work? I don't have the answers, but I'm guessing it can't hurt.

PKF Hospitality Research recently lowered its 2009 projections: a 4.3 percent decline in RevPAR and a 7.9 percent drop in profit. The news wasn't quite as dire in the Travel Industry Association's recent report on the "2009 Outlook for U.S. Travel and Tourism." It showed the resilience of leisure travel—only a .2 percent decline in '08, -1.3 percent projected for next year. Business travel didn't fare as well, with a 3.6 percent drop in '08 and a 2.7 percent decline projected for next year. The other key element to the report was travelers are and will continue to trade down through this slowdown. They'll travel, but maybe only to a closer destination, cheaper hotel and/or for a shorter stay.

I'll be heading to New York next week for the International Hotel/Motel & Restaurant Show and I look forward to getting the pulse of the industry, as well as of the city that is home to our financial and cultural epicenters.

We shall see. And I, of course, will report back.

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