Hotel & Motel Management - September 1, 2008 - (Page 18) 18 Trends & Stats H&MM September 1, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Luxury segment takes harder hit than expected IN THE details Luxury hotels underperform Room rate growth declines Less business travel Help from groups, overseas Chain scales supply/demand percent change June 2008 YTD 10 5.8 5 3.5 1.5 1.9 2.1 5 By Mark Lomanno H&MM Columnist ver the past several months, most segments of the U.S. lodging industry have experienced a difficult time. As the U.S. economy continues to struggle with no real signs of an immediate end to the primary factors causing the stagnation, it is now clear that segments and markets that report improving performance are going to be the exception rather than the rule. The economic effect on luxury chains, however, has been faster and more pronounced than one might expect. For that matter, it’s been even a little worse than the supply and demand data would indicate. As is often the case with changing economic conditions, two major factors dictate segment performance: the economic conditions themselves, and how operators react and anticipate for the future. It is clear from recent luxury chain hotel results that their performance, especially from an average room rate perspective, is being negatively affected by the factors mentioned above. In fact, when examining luxury chain room rate growth so far this year, it is below the industry average. As this group of hotels consistently has been the room rate growth leader for much of the last sever- O al years, the softening of that rate growth has been most dramatic here. One economic factor disproportionately affecting luxury hotels’ ability to grow room rates compared to other segments has been the distress experienced by much of the financial community, especially the Wall Street firms whose own financial performance has been the worst in recent memory. As these types of firms historically have been huge demand generators for luxury hotels, the significant expense cutbacks have affected both the quantity and type of lodging accommodations these firms require. This falloff in demand has been obvious, immediate and not easily replaced, especially in places like New York, where luxury hotels have been the weakest average daily rate performers so far in 2008. With much of their demand base under mid- to long-term stress, luxury hotels have been forced to look for alternative feeder markets. One possibility is to increase group business. While this is helpful for occupancy, this type of demand typically does not have the same ADR upside as transient business travelers because the room rate is locked in well in advance of the stay and inhibits a property’s ability to maximize yield management. Another potential source of demand replacement is overseas guests, especially from Europe, where currency conversion makes the U.S. an attractive destination. In conclusion, for the foreseeable future, luxury hotel performance likely will lag behind that of the industry in general, especially from a room rate growth perspective. hmm@questex.com Mark V. Lomanno is president of Hendersonville, Tenn.-based Smith Travel Research. 3.4 1.2 3.3 0 -2.5 -1.7 -5 Supply Demand Luxury Upperupscale Upscale -6.5 -10 Midscale w/F&B Midscale w/o F&B Economy Chain scales occupancy/ADR percent change June 2008 YTD 10 Occupancy ADR 5 2.9 3.1 2.8 4.2 4.5 2.0 0 -2.2 -1.8 -2.3 -4.1 -3.0 -5 Luxury Upperupscale Upscale -3.7 Midscale w/F&B Midscale w/o F&B Economy Chain scales RevPAR/room revenue percent change June 2008 YTD 15 RevPAR Room Revenue 10 6.4 6.5 4.7 1.3 0.6 1.4 0 -2.5 -1.8 5 0.6 4.1 0 0.3 -5 Luxury Upperupscale Upscale Midscale w/F&B Midscale w/o F&B Economy Luxury chains supply/demand percent change 12-month moving ended June 2008 20 15 10 Supply Demand Luxury chains key performance indicators 12-month moving ended June 2008 15 2007 9.8 2008 10 4.6 3.3 2.3 0.7 9.1 4.9 5 5 0 -5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 3.9 3.8 -1.0 -5 Supply Demand Occupancy ADR RevPAR © 2008 Smith Travel Research http://HotelMotel.com http://www.HotelMotel.com/digital_edition
Table of Contents Feed for the Digital Edition of Hotel & Motel Management - September 1, 2008 Hotel & Motel Management - September 1, 2008 Contents Element LEEDs Brand-wide Promise NABHOOD Speakers: Hold Rates Perspective Letters to the Editor Legally Speaking Satisfaction Trends AAHOA Update Energy Star Update Marketing Matters Events HotelWorld Update Trends & Stats Coffee Services Business Equipment Ad/Editorial Index Marketplace Classifieds Checking Out Hotel & Motel Management - September 1, 2008 Hotel & Motel Management - September 1, 2008 - Hotel & Motel Management - September 1, 2008 (Page 1) Hotel & Motel Management - September 1, 2008 - Hotel & Motel Management - September 1, 2008 (Page 2) Hotel & Motel Management - September 1, 2008 - Contents (Page 3) Hotel & Motel Management - September 1, 2008 - NABHOOD Speakers: Hold Rates (Page 4) Hotel & Motel Management - September 1, 2008 - NABHOOD Speakers: Hold Rates (Page 5) Hotel & Motel Management - September 1, 2008 - Letters to the Editor (Page 6) Hotel & Motel Management - September 1, 2008 - Letters to the Editor (Page 7) Hotel & Motel Management - September 1, 2008 - Satisfaction Trends (Page 8) Hotel & Motel Management - September 1, 2008 - Satisfaction Trends (Page 9) Hotel & Motel Management - September 1, 2008 - AAHOA Update (Page 10) Hotel & Motel Management - September 1, 2008 - AAHOA Update (Page 11) Hotel & Motel Management - September 1, 2008 - Energy Star Update (Page 12) Hotel & Motel Management - September 1, 2008 - Energy Star Update (Page 13) Hotel & Motel Management - September 1, 2008 - Marketing Matters (Page 14) Hotel & Motel Management - September 1, 2008 - Marketing Matters (Page 15) Hotel & Motel Management - September 1, 2008 - Events (Page 16) Hotel & Motel Management - September 1, 2008 - HotelWorld Update (Page 17) Hotel & Motel Management - September 1, 2008 - Trends & Stats (Page 18) Hotel & Motel Management - September 1, 2008 - Trends & Stats (Page 19) Hotel & Motel Management - September 1, 2008 - Trends & Stats (Page 20) Hotel & Motel Management - September 1, 2008 - Trends & Stats (Page 21) Hotel & Motel Management - September 1, 2008 - Coffee Services (Page 22) Hotel & Motel Management - September 1, 2008 - Coffee Services (Page 23) Hotel & Motel Management - September 1, 2008 - Coffee Services (Page 24) Hotel & Motel Management - September 1, 2008 - Coffee Services (Page 25) Hotel & Motel Management - September 1, 2008 - Business Equipment (Page 26) Hotel & Motel Management - September 1, 2008 - Business Equipment (Page 27) Hotel & Motel Management - September 1, 2008 - Business Equipment (Page 28) Hotel & Motel Management - September 1, 2008 - Business Equipment (Page 29) Hotel & Motel Management - September 1, 2008 - Ad/Editorial Index (Page 30) Hotel & Motel Management - September 1, 2008 - Ad/Editorial Index (Page 31) Hotel & Motel Management - September 1, 2008 - Marketplace (Page 32) Hotel & Motel Management - September 1, 2008 - Classifieds (Page 33) Hotel & Motel Management - September 1, 2008 - Classifieds (Page 34) Hotel & Motel Management - September 1, 2008 - Classifieds (Page 35) Hotel & Motel Management - September 1, 2008 - Classifieds (Page 36) Hotel & Motel Management - September 1, 2008 - Classifieds (Page 37) Hotel & Motel Management - September 1, 2008 - Checking Out (Page 38) Hotel & Motel Management - September 1, 2008 - Checking Out (Page 39) Hotel & Motel Management - September 1, 2008 - Checking Out (Page 40)
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