Skip to main content

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?

Comments

  1. Hannah Feuerstein-SimonSeptember 5, 2011 at 8:52 PM

    While the country is certainly in a recession and people aren't spending as much of their disposable income on going out to eat and traveling, people are still going on vacations to some extent. As you mentioned, the occupancy rate for hotels was up almost 3% from 2009 to 2010, so that shows some progress.
    My family is going to New York City this weekend and looking for a hotel to stay in. A hotel we normally stay in that costs around 300 or 400 dollars was over 500 dollars for this coming weekend. These price increases show that the hotel rooms are in high demand and the hotel is able to make such a price adjustment for that specific weekend.
    In terms of investing in certain companies, the types of things I look for are improvement in the quality of the room and the customer service that the hotel has. I always look for technological advances in hotels when I go. It makes me happy to see progress and alterations of the room I'm spending money on. Something like a heated floor and towel racks would be things I would look forward to.
    Not only are the amenities of the hotel room important to me to make an investment decision, relying of competent staff is extremely important. There is nothing worse than checking into a hotel with a front desk agent that doesn't know anything about the hotel and/or isn't friendly. Additionally, having quick service when I make a phone call is important. I don't want to wait an hour to get an extra towel delivered to my room.
    With these areas in mind I would be able to make an educated decision in my investments during the recession.

    ReplyDelete
  2. Thank you, Hannah. All of my friends are telling me how difficult it is now of finding a cheap room in Manhattan. Plus, NYC becomes the No. 1 destination of the U.S. in the last two years (I believe). I also like your ideas of investing in technology and service. Very good comments.

    ReplyDelete

Post a Comment

Popular posts from this blog

Social media engagement is immune to COVID-19 (by Steven Valenzuela)

In the unparalleled world of COVID-19, individuals are flooded with choices: whether it be what to eat or what church service to watch. While there are marketing strategies to get consumers to purchase products to immediately increase sales, it may be a more beneficial to engage with low spending consumers in the short term, so that businesses can keep them for the long term.   Social media game strong   During this time, it is crucial to keep social media posts constant and consistently more than ever before. A recent podcast by eMarketer reports that social media outlets such as Facebook have seen a significant rise in usage. The reality is that individuals have more time on their hands, which is why it is important for businesses to utilize their free time to create content for their social media channels. In a recent interview with the hospitality net, Leland Pillsbury stated  “Customers are going to come back...And if you allow your competitors to reengage with the guests before

The 7 Ps marketing mix of home-sharing services: Insights from over one million Airbnb reviews

The 7 Ps marketing mix framework is a widely used managerial tool that helps businesses identify the principal components of a service product. The 7 P elements include Product, Promotion, Price, Place, Participant, Physical Evidence, and Process.   The 7 Ps framework can assist marketers in making decisions regarding segmentation, positioning, and differentiation. Even for the same type of products with different brands, marketers can still drive higher sales through the improvement of a product’s marketing mix.     The empirical study about 7 Ps of home-sharing services   Building upon the 7 Ps marketing mix framework, I led a research team in a big-data, supervised machine learning analysis of over 1.14 million English reviews of 37,092 Airbnb listings in San Francisco (SFO) and New York City (NYC). We aimed to discover new meaningful business intelligence through the analysis of an immense quantity of online review information that is created by consumers in the cyber marketplace

We are in this together (by Konica Chhin)

It’s no secret that the hospitality industry has been hit hard with the current pandemic we are dealing with. From vacant hotel rooms to empty restaurants, sales have plummeted since the outbreak of Covid-19. Some businesses, especially small, are barely surviving. While we are all required to abide by the stay-at-home order that the government placed, the hospitality industry is considered essential. We are the ones that provide shelter and food for individuals. Let’s take a look and see what our industry has done to help market themselves and stay in business during this unpredictable time. Due to the stay-at-home order and people being cautious, people are not taking vacations or staying at hotels for that matter. Hotels are one sector of our industry that got hit the worse. Most hotel sales have dropped at least 50% and many of them decided to shut their doors. We all know how expensive it is to operate a hotel from paying employees to electricity. There are so many things that