Hotel & Motel Management - June 2, 2008 - (Page 14)

14 Satisfaction Trends IN THE details Most guests are price-sensitive Luxury guests willing to pay more Top-tier hotels could raise rates Kudos to luxury hotel brands H&MM June 2, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Are luxury hotels recession-proof? H By Jonathan By Lenny Barsky Nash H&MM H&MM Columnist Columnist ow pervasive will the economic downturn be across the hotel industry? Will all hotels feel the pain, or will some hotels be more resilient and others more vulnerable? Which customers will keep spending and pull some hotels through recessionary pressures? To help answer these concerns, Market Metrix examined the recent price sensitivity of the U.S. hotel market. By tracking how much more a guest would be willing to pay per night before switching to another hotel (“price premium”), the Market Metrix Hospitality Index monitors price sensitivity of hotel guests. This evaluation is helpful to understand brand equity and evaluate the components that affect rate tolerance. Our analysis compared 2006 and 2007 results for all hotel properties. The results indicate that most hotel guests are becoming more price-sensitive and are not willing to tolerate the same price increase as they were a year earlier. So are luxury hotel rates too low? Perhaps. In fact, luxury hotels boosted rates by 6 percent in 2007 and maintained their occupancy levels (71 percent). Surprisingly, upper-upscale hotels also boosted rates in 2007 (4 percent), but even with a smaller increase, their guests show more resistance to future rate increases. At least part of the price strength of luxury hotels can be explained by the size of this segment: There are not many luxury hotels, and the number of guests able to afford luxury accommodations has risen in the past few years. Room rates in popular cities will continue to rise as demand outstrips supply. Guests willing to pay more “We work with many of the largest ATM deployers in the country and have found that in terms of service levels, operational controls, and integrity of the operators that ATM Systems is in the very upper echelon of all of the ATM companies in the country.” --Cash Connect, a division of WSFS Bank John Clatworthy, VP of Sales & Marketing “I am a loyal client as a result of your professionalism and reaction time to my needs. Your decision to replace the old ATM was much appreciated. The new ATM is perfect.” --Radisson Hotel Sacramento George LaPointe, Director of Operations “Our front desk employees continually share with me the positive feedback they have received from our guests. Based on these comments, it’s clear that the ATM is fulfilling a guest service need at our hotel and has proven to be a real convenience for our guests.” --Radisson Hotel Boston Jack Eagan, Controller Luxury hotels typically cater to distinct guests, often wealthy individuals to whom price is less of a factor. In addition, international tourists are taking advantage of a weakening U.S. dollar and often upgrade to higher-end, luxury U.S. accommodations. But wealthy and international guests should not get all the credit for the price strength of these toptier hotels. Some credit must go to the hotels for attracting these guests and creating revenue in the midst of economic uncertainly. Comparing luxury hotel brands (2006 vs. 2007), InterContinental and Grand Hyatt showed the biggest gains in guest loyalty. But a lack of price sensitivity should not be a green light to raise luxury hotel prices. For other hotel segments, slashing prices as a reaction to the recession is never good for business and it could erode your brand image. Instead, take an aggressive approach to keep your paying customers happy. Market share is more important than ever in a downturn. hmm@questex.com Jonathan Barsky and Lenny Nash work for Market Metrix LLC (www.MarketMetrix.com), a ﬁrm that provides customer and employee programs for the hospitality industry. For more information, call (800) 239-7515. ATM Systems CIRCLE NO. 101 http://www.HotelMotel.com/digital_edition http://HotelMotel.com http://www.marketmetrix.com

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - June 2, 2008

Hotel & Motel Management - June 2, 2008 Contents State Programs Help Define Green Hotels AmericInn Boosts its American Presence Questex, The Bench to Host Russia Event Perspective Letter to the Editor Legally Speaking Guest Column Marketing Matters Consultant's Corner Satisfaction Trends On Finance Travel Trends Cornell Insights Energy Star Update Maintenance Doctor Management Trends Trends & Stats Finding Financing Challenges Developers Credit Crunch Still Tops List of Lawyers' Concerns Mixed-use Funding Bleak, Panelists Say Luxury Landscape Keeps Pushing Higher PTACs Events Casegoods Seating Energy Controls and Sensors Pest Control Electronic Locks Transactions Supplier News Timeshare Misconceptions Still Prevalent Awards People Ad/Edit Index Marketplace Classifieds Checking Out

Hotel & Motel Management - June 2, 2008

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