Marketing Review - Spring 2008 - (Page 55)

HSMAI/DKSA Traveler Acceptance/Indexsm Chart 3: Domestic room night volume changes by segment 350 50 High End Domestic Room Night Volume Index 300 Mid-Level Domestic Room Night Volume Index Economy Domestic Room Night Volume Index High End 40 Segment Domestic Volume Index (Base: YE 2000, Total Room Nights) 250 30 200 Mid-Level 150 Economy 20 100 10 50 0 2000 2001 2002 2003 2004 2005 2006 2007* 0 * 12-month rolled up to date HSMAI/DKSA Traveler Acceptance/Indexsm Chart 4: Total domestic room night volume charges Looking Ahead: “Stressed Experience” Phase, 2007-2009? Looking forward, continued softening of the economy will likely result in declining TAI levels. Historically, the turndown starts in the most price sensitive economy segment, moves to the mid-level and lastly impacts high-end travelers. When the economy slows, Shifflet says it is not unusual for hoteliers to try to maintain profits by continuing to raise rates, while at the same time reducing staff and slowing the refurbishment rate. But hoteliers should expect guest acceptance levels to drop as rates continue to increase and product quality diminishes, resulting in traveler changes in where they stay. “TAI monitoring can be quite helpful in determining when rates can be raised without deterring repeat business and at what point product or service improvements will provide leverage against price increases and the competition,” he says. So what can hoteliers do to manage challenging economic times, and what can they expect to see in guest acceptance as it relates to the economy? • Avoid leaving money on the table Increase rates as you make product improvements. “We saw the TAI ramp up in 2002-2004 when hotels got serious about eliminating bad product and improving room quality, but hoteliers didn’t really start increasing rates until 2004 when volumes were increasing dramatically,” says Shifflet. “If hotels are late in raising rates and continue to hike prices beyond the point of perceived value at the end of a cycle, it can backfire.” Bottom line? As long as the TAI is long and flat and not going down, hotels can raise prices at least in line with inflation. • Balance rate increases with product improvements To maintain a strong TAI for generating loyalty and repeat business, make rate increases proportional to the guest perceived improvements. For notable quality 55 TRAVELER ACCEPTANCE/IndexSM (Base: YE2000, Total) Total Domestic Room NightVolume Index (Base YE2000, Total Hotel Volume) 115 High End 110 Mid-Level Economy 105 100 95 90 85 80 2000 2001 2002 2003 2004 2005 2006 2007* SPRING 2008 • HSMAI MARKETING REVIEW

Table of Contents Feed for the Digital Edition of Marketing Review - Spring 2008

HSMAI Marketing Review - Spring 2008 Contents COLUMN: The Online Marketer COLUMN: Success Stories COLUMN: Guest Column Ten Trends Now Shaping the Future of Hospitality Turning the 2008 Consumer Tax Rebates into Hospitality and Travel Sales 25 Extraordinary Minds in Hospitality and Travel Sales and Marketing The Lure of Lore: Connecting with Customers Through a Unique Brand Story A Careful Balancing Act A Meaningful Relationship: How Technology Affects the Connection Between Hospitality Marketers and Meeting Planners SPECIAL SECTION: The 2007 HSMAI Adrian Awards Building Five Star Imagery

Marketing Review - Spring 2008

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