Hotel & Motel Management - February 18, 2008 - (Page 14)

14 Trends & Stats H&MM February 18, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Midscale segment solid; outlook remains positive IN THE details Segment offers value High supply, revenue shares Midscale-without-F&B on the rise Targeting guests’ needs Midscale chains – 12 months through November 2007 room revenue share Midscale w/F&B 9% Midscale w/o F&B 14% By Bobby Bowers H&MM Columnist idscale chains arguably are the backbone of the U.S. lodging industry. Brands within the segment accounted for explosive growth in the ’60s and ’70s. As the U.S. interstate system grew, families and business travelers alike hit the road in numbers never seen before, and midscale chains provided excellent accommodations at an affordable price. In the ’80s and ’90s, the segment “reinvented” itself, as new brands entered the segment as “rooms only” products, without extensive food-andbeverage operations and meeting space. Today, midscale chains continue providing business and leisure travelers more locations than any other segment. Smith Travel Research separates midscale chains into two groups: midscalewith-food-and-beverage and midscalewithout-food-and-beverage. The midscale segment accounts for 27.5 percent of U.S. industry room supply and about 23 percent of room revenue—the largest supply and revenue shares of any segment. The number of midscale-with-F&B hotels has declined in recent years, as older product was taken out of inventory and select properties were converted to different segments or new uses. The segment’s share of U.S. industry room supply de- M creased from 13.8 percent in 2002 to 11.8 percent in 2007. Currently, there are just more than 11,000 midscale-with-F&B rooms under construction. During the same time period, midscale-without-F&B hotels signiﬁcantly increased in number, moving from a 14percent supply share in 2002 to 15.8 percent in 2007. Over the past ﬁve years, midscale-without-F&B has added more rooms than any other segment, and it has nearly 55,000 rooms under construction—tops among chain-afﬁliated hotels. Most companies offering midscale-withF&B products created sister brands in the midscale-without-F&B segment in order to capitalize on the movement toward “rooms only” product offerings in the midscale segment. Midscale-without-F&B hotels have enjoyed consistent occupancy premiums over midscale-with-F&B properties. In 2002, midscale-without-F&B hotels held an occupancy premium of 5.7 percentage points. The premium has increased fairly steadily over the past ﬁve years, and currently it stands at 6.6 percentage points. On the average rate front, since 2002, midscale-without-F&B properties have closed the gap versus midscale-with-F&B, and they ﬁnally pulled ahead in 2007. The outlook is bright for midscale chains. Midscale-with-F&B chains are offering redesigned products with streamlined F&B service and “right-sized” meeting facilities. These products are targeted to provide guests with needed, on-property services without excess cost. Midscalewithout-F&B chains continue to evolve and tailor their products for a variety of travel occasions. hmm@questex.com Bobby Bowers is senior vice president of operations for Hendersonville, Tenn.-based Smith Travel Research. All other 77% Total room revenue = $104 billion Midscale-with-F&B chains – Supply/demand percent change – 12-month moving average to November 2007 10 5 0 -5 -3.1% -10 -15 1999 2000 2001 2002 2003 2004 2005 2006 2007 Supply % change Demand % change -2.5% Midscale-with-F&B chains – Occupancy/ADR percent change – 12-month moving average to November 2007 8 6 4 2 0 -2 -4 -6 -8 -10 1999 2000 2001 2002 2003 4.6% -0.7% Occ. % change ADR % change 2004 2005 2006 2007 Midscale-without-F&B chains – Occupancy/ADR percent change – 12-month moving average to November 2007 10 8 6 4 2 0 -2 -4 -6 1999 2000 2001 2002 2003 2004 2005 2006 2007 Occ. % change ADR % change -0.8% 7.1% Midscale-without-F&B chains – Supply/demand percent change – 12-month moving average to November 2007 18 16 14 12 10 8 6 4 2 0 1999 2000 2001 2002 2003 2004 Supply % change Demand % change 4.0% 3.1% 2005 2006 2007 © 2007 Smith Travel Research http://HotelMotel.com http://www.HotelMotel.com/digital_edition

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - February 18, 2008

Hotel & Motel Management - February 18, 2008 Contents ALIS Attendees: Bumpy Road Ahead Denihan Expands with James Hotel Purchase AAA Updates its Diamond Rating Guidelines Perspective Letters to the Editor Legal FAQ Satisfaction Trends Sales Clinic HotelWorld Update Trends & Stats Locally Grown Food Gains Popularity Companies Cultivate International Ties Wireless Internet Access Opens Up Possibilities Ice Machine Care Improves Efficiency, Performance The Importance of F&B to Leisure Travelers Lamps/Lighting Transactions Events Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - February 18, 2008

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