What is the Outlook for the Lodging Industry?

AAA estimated that there would be 2.4% less people travelling in this Labor Day weekend than last year. The Wall Street is worrying about the future of the lodging and leisure industry. So, how is the industry doing? What will the future look like?

Starting from 2010, I have heard from my industry network that hotels are picking up business. If we look at the 2011 Lodging Industry Profile by the American Hotel & Lodging Association, we can see that the ADR (average daily rate) is up slightly from $97.85 in 2009 to $98.07 in 2010 and that the occupancy rate is up from 54.7% in 2009 to 57.6% in 2010. Even though 2010 is not as good as 2008 (ADR: $106.84 with an occupancy rate of 64.37%) and everyone is still very concerned about the job market and their spending, we are able to observe some positive signs of recovery in the lodging and leisure industry. The issue is probably some market segments perform (or recover) better than others. In general, it seems that boutique hotels are doing fine and every hotel chain is trying to get into the boutique hotel market. Midscale and economy/budget segments are also doing well --- sales of Best Western are up 12% from last year as suggested in this embedded CNBC video; Wyndham is also doing well according to another CNBC report.

To become a market leader, one must continuously invest in the company even during recessions. Best Western focuses on Sales and Marketing, with the efforts of rebranding the chain and hiring more sales & marketing staff. Sheraton is having a $6 billion makeover plan. What about you? In which area(s) will you invest during recessions?

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