Business Travel News - December 15, 2008 - (Page 8) NEWS Convention Hotels Hit Hard Continued from page 1 A Smith Travel Research report released in late November showed that U.S. convention hotels—defined as properties with at least 300 rooms and at least 20,000 square feet of meeting space—are lagging behind the industry in terms of revenue per available room and the modest gains seen in rates. For the first 10 months of the year, revenue per available room dropped by 1 percent for U.S. convention hotels compared with the same period in 2007, while the U.S. lodging industry has seen a drop of only 0.3 percent. Average daily rate increased by 2.4 percent for convention hotels during the period, compared with a 3.2 percent increase for the industry overall. Those metrics are likely to worsen in 2009. Bjorn Hanson, associate professor at New York University’s Tisch Center, said there could be a 6 percent to 9 percent decline in bookings in the first quarter of 2009, representing a 10 percent to 12 percent drop in revenue. “As unfavorable as the recent news has been, in some ways it remains a false positive,” Hanson said. “Many of the meetings and conventions that have been occurring in the last quarter of 2008 or will occur in the first quarter of 2009 were booked years ago. As we go forward, the group and convention market will be among the most severely affected, as there are more opportunities to be losses in demand than the other demand segments.” Convention hotels in certain markets are being hit particularly hard, according to Smith Travel Research. In its October year-to-date performance, Las Vegas, which has the largest number of convention hotel guest rooms in the United States, has seen occupancy drop by 7.4 percent, RevPAR drop by 7.7 percent and average daily rate drop by 0.4 percent, the only key convention hotel market to see a rate decline, the report indicated. Maui, Hawaii, also has seen a 7.4 percent drop in occupancy and 7.7 percent drop in RevPAR, and Chicago has seen a 4 percent drop in occupancy and 0.8 percent drop in RevPAR. Hoteliers are noting the slowdown, particularly as meeting planners are shortening their booking windows as they wait for rates to to holding their events but deferring final commitment to booking it.” Andy Dolce, chairman of Dolce Hotels and Resorts, said his company has seen some slippage in this current quarter and echoed Sorenson’s observation. “The pace of bookings is behind in 2009,” Dolce said. “There’s very little advance in U.S. CONVENTION HOTELS TRAIL OVERALL INDUSTRY IN KEY PERFORMANCE METRICS YEAR-OVER-YEAR CHANGE, JANUARY THROUGH OCTOBER 2006 2007 Convention Occupancy RevPAR ADR 0.8% 7.7% 6.8% All 0.6% 8.3% 7.6% Convention 0.6% 6.6% 6.0% All -0.1% 6.1% 6.2% 2008 Convention -3.4% -1.0% 2.4% All -3.4% -0.3% 3.2% Source: Smith Travel Research drop and see how the economic downturn affects their budgets. During his company’s recent third-quarter earnings conference call, Marriott International CFO Arne Sorenson said the Marriott Hotels & Resorts brand—which counts about 40 percent of its business as group— saw year-over-year RevPAR flatten in the quarter, compared with a 4 percent to 5 percent increase in RevPAR in the same period in 2007. “Group is clearly trending down,” Sorenson said. “Our group customers we think are still committed the second, third and fourth quarter, but activity is still good. People are planning, but they’re not going to pull the trigger until they get really close to the meeting.” Dolce Hotels also indicated that it would begin more aggressively courting the leisure travel market to diversify its revenue streams. NYU’s Hanson said there could be an increase in cancellations of convention hotel projects that are not far along, although the construction cycle for such properties is longer than those for other hotels, so proj- ects in the early stages might still be two to four years away from opening, at which time the economic downturn could be reversed. Still, there are signs that the slowdown in actual meetings booked might not be severe. Mary MacGregor, vice president of marketing and business development for BCD Meetings & Incentives, said that her bookings remain strong. There have been some cancellations for 2009, but companies are looking for space in 2010 and beyond, she said. At the same time, buyers are becoming more aggressive in driving down costs, she said. “The biggest shift for us is, on a project-by-project basis, we’re sourcing many more hotels for each project, because customers are really looking for the best deal possible,” MacGregor said. “For the first time in seven years, there is some buyer advantage.” While buyers will have luck in securing better rates this year than in years past, they are unlikely to see much movement when it comes to loosening meeting terms and conditions, according to MacGregor. “Even though hotels have to be competitive, they’re still holding strong to those terms,” she said. “When they sign a contract, they’re taking the product off the shelf and don’t have the ability to supplement that revenue if there’s a cancellation.” Hanson said a significant portion Continued on page 10 United To Add Upselling Sabre competitors Amadeus and Travelport GDS also are hard at work on offerings to enable new selling and shopping options. Travelport GDS in April announced Continued from page 6 the acquisition of some of G2 SwitchWorks’ “software asaccess and everything,” Moore said. sets and intellectual property,” which it planned to use During the Credit Suisse Global Airline Conference in to deliver a new platform for merchandizing, upselling New York this month, several legacy airlines, including and unbundling products and services. American Airlines and US Airways, promised acceleraMeanwhile, Amadeus this year also announced its tion of the unbundling trend. United senior vice presi- work on the Airline Retailing Platform to deliver such cadent and CFO Kathryn Mikells during the pabilities to airlines and agents (BTNonAccess the conference said seat upselling has been 2008 Business Travel Survey line, April 3). well received by customers, claiming Amadeus executive vice president of see btnonline.com/survey through internal research that eight out commercial and recently appointed CEO of 10 passengers who upgrade to Premium Plus would David Jones said United’s upselling initiative would be do so again. a good fit for their platform. “The airline revenue model is clearly changing and “One of the objectives of the Airline Retailing Platunbundling is giving customers more choice,” Mikells form is exactly to enable that type of upselling,” Jones said, noting that further unbundled offerings through the said, “so I think it makes a hell of a lot of sense.” GDS are in “the pipeline to be announced next year.” ■ jboehmer@btnonline.com ■ 8 Monday, December 15, 2008 www.BTNonline.com Business Travel News http://www.btnonline.com/survey http://www.BTNonline.com
Table of Contents Feed for the Digital Edition of Business Travel News - December 15, 2008 Business Travel News - December 15, 2008 Contents Inside Track Profiles In Travel Mgmt Forum Aviation Lodging Ground Transportation Travel Management Meetings Today Washington Wire Business Travel News - December 15, 2008 Business Travel News - December 15, 2008 - Business Travel News - December 15, 2008 (Page 1) Business Travel News - December 15, 2008 - Business Travel News - December 15, 2008 (Page 2) Business Travel News - December 15, 2008 - Contents (Page 3) Business Travel News - December 15, 2008 - Inside Track (Page 4) Business Travel News - December 15, 2008 - Inside Track (Page 5) Business Travel News - December 15, 2008 - Profiles In Travel Mgmt (Page 6) Business Travel News - December 15, 2008 - Profiles In Travel Mgmt (Page 7) Business Travel News - December 15, 2008 - Profiles In Travel Mgmt (Page 8) Business Travel News - December 15, 2008 - Profiles In Travel Mgmt (Page 9) Business Travel News - December 15, 2008 - Forum (Page 10) Business Travel News - December 15, 2008 - Forum (Page 11) Business Travel News - December 15, 2008 - Forum (Page 12) Business Travel News - December 15, 2008 - Forum (Page 13) Business Travel News - December 15, 2008 - Aviation (Page 14) Business Travel News - December 15, 2008 - Aviation (Page 15) Business Travel News - December 15, 2008 - Lodging (Page 16) Business Travel News - December 15, 2008 - Lodging (Page 17) Business Travel News - December 15, 2008 - Ground Transportation (Page 18) Business Travel News - December 15, 2008 - Ground Transportation (Page 19) Business Travel News - December 15, 2008 - Travel Management (Page 20) Business Travel News - December 15, 2008 - Meetings Today (Page 21) Business Travel News - December 15, 2008 - Meetings Today (Page 22) Business Travel News - December 15, 2008 - Meetings Today (Page 23) Business Travel News - December 15, 2008 - Meetings Today (Page 24) Business Travel News - December 15, 2008 - Meetings Today (Page 25) Business Travel News - December 15, 2008 - Washington Wire (Page 26) Business Travel News - December 15, 2008 - Washington Wire (Page 27) Business Travel News - December 15, 2008 - Washington Wire (Page 28)
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