Hotel & Motel Management - September 3, 2007 - (Page 34)

34 News H&MM September 3, 2007 | HotelMotel.com Continued from page 1 steady. As of June, the national average was 63.2 percent. Jim Rozell, senior director of revenue optimization at Minneapolis-based Carlson Hotels Worldwide, said he is mildly surprised to see continued rate growth. “We do a lot of economic tracking,” he said. “We put a lot of attention on indicators in the industry. For full service we see continued rate growth, but for select service and midscale without food and beverage we don’t see growth.” At the property level, Jean Hoesing, g.m. of the Ramada Inn and Suites in Sioux Falls, S.D., reported rates have increased. Ramada is working to bring about rate parity, one g.m. said. The big picture Freitag said a historical trend is emerging with the metrics. “Rates will continue to increase even though occupancy will con- Second quarter 2007 performance by chain scale Chain scale Luxury Upper-upscale Upscale Midscale w/F&B Midscale w/o F&B Economy Independents Occupancy 74.0% 75.0% 73.5% 63.1% 69.9% 60.5% 64.6% ADR RevPAR $288.68 $213.70 $160.34 $120.24 $118.44 $87.01 $86.17 $54.37 $87.44 $61.14 $53.89 $32.63 $99.20 $64.10 $103.07 5.4 $68.90 5.7 Total U.S. 66.8% Percent change from 2Q 2006 0.4 Source: Smith Travel Research of revenue management strategy. With Ramada’s help, rate parity on the third-party sites and on the corporate site has been a big change, according to Hoesing. Ramada is a franchised brand of Wyndham Hotel Group. “Two years ago, the third-party sites were running hotels,” she said. “Now we’re all smart enough to know you can help regulate what the third party rates are.” Rozell said Carlson also has negotiated contracts and ﬁxed industry discounts to make them more manageable for hotels. “We drive our strategy around not just keeping the high end up,” he said. “Our strategy on right sizing the lower end becomes as we negotiate contracts, we do what our bigger competitors have had to do over the last few years and make contracts less one-way.” Rozell said the third-party sites are helping consumers learn that peak demand days can drive room rate for every day of their stay. “They’re OK with that,” he said. “Which gives us much more rate opportunity.” No matter how hotels get there, rates deﬁnitely are on the rise. The industry reached a milestone in May, when the 12-month moving average of annualized ADR hit $100.01, Freitag said. And the signiﬁcance? “It’s a big number so a lot of people care,” Freitag said. “It is the ﬁrst time we’ve had triple digit rates, so the question is now are we looking forward to breaking $200?” shiggins@questex.com Dimond: Put proﬁt back into properties By Stacey Mieyal Higgins SENIOR EDITOR Everything you need to prepare for your special guests ADA (Americans with Disabilities Act) Compliance for deaf, hard of hearing and senior guests with special hearing needs. • Best Prices • Fast Service • Replacement Pieces 800-288-8303 www.hitec.com CIRCLE NO. 118 CIRCLE NO. 111 While revenue management is essential, investing in assets also is a smart way to protect the bottom line, according to Navin Dimond, c.e.o. and president of Englewood, Colo.-based Stonebridge Cos. “We are continuing to substantially improve our product and make a difference in terms of quality by replenishing things before it becomes apparent to the guest,” he said. Today’s guests know what comforts they want at a hotel, he said. For instance, Stonebridge is replacing carpet before it looks worn and adding ﬂatscreen TVs when possible. High-speed Internet access is a must. “In this strong market, we’ve taken advantage of it,” Dimond said. “We know it’s going to change and when it does, it’s going to be harder to improve the product. When it comes, we can weather that storm.” Basics count, he said. “Some people get so focused on [technology] they forget about the quality of the wall vinyl or the carpet, or is the bathroom clean,” Dimond said. “You can’t take your eye off any of the balls.” shiggins@questex.com RAMADA INN AND SUITES Revenue Hoesing credits the hotel’s ability to close out discounted rates by third-party sites, which requires daily revenue management. Rozell said Carlson’s Revenue Optimization Performance Enhancement Services have helped the company outpace the competition in the ﬁrst half of the year. Consultants go to hotels to help operators look forward, he said. “The ROPES program is successful,” Rozell said. “The initial strategy is rate driven, and it means right-sizing the rate sometimes at the expense of occupancy.” tinue to soften through the next year,” he said. The pattern of a decline in occupancy while rates are rising is similar to a trend STR saw a decade ago, according to Freitag. “In the mid-’90s, occupancy decreased for 44 months while rates increased,” he said. “We’re just starting to see negative occupancies, so we’re just about ﬁve months in. But we think history will repeat itself.” Freitag said it will take time to see how long the trend will last. As an airline industry veteran, Rozell said the hotel marketplace has been “very reactionary and short term.” “I’ve pushed Carlson to think of things we can do in the future. … to make the strategy anticipatory,” he said. In addition to the ROPES program, Carlson uses forecasts from JDA Software and looks at employed hourly earnings and personal consumed expenditures to prepare for changes in the market, according to Rozell. “As the economy catches up with us and we hit the peak of our cycle, hotel companies will become more strategic,” Rozell said. “There are different ways to price groups, to set rates in advance and segment customers in a more proactive manner. It’s nice that Carlson is taking those steps now.” Rate parity is an important part http://HotelMotel.com http://sterifab.com http://www.hitec.com http://www.hitec.com http://sterifab.com

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Hotel & Motel Management - September 3, 2007

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