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

Yammer: A Social Networking Site Exclusively for the Workplace

Effective internal communications among employees are related to some desirable organizational outcomes, such as robust morale, a clear vision, low turnover, and high employee engagement. The question is what platform can serve the purpose. This ABC News video introduces “ Yammer ,” an exclusive internal communication tool for companies. A user must use a valid company e-mail address to sign up for an account. Once an account is validated, the user will be led to the company page that is pretty much like a Facebook page. The difference is that only the users whose e-mail addresses share the same domain can see the wall and communicate with each other. I have no question about whether Yammer could be a useful internal communication tool for companies, but I just wonder: how many social networking sites do people need for communication? Why people have to “create” so many platforms or channels for “effective communications”? To many people, Facebook is only for “friends,” whe

Can leisure and work-from-home demand stimulate extended-stay hotel growth beyond COVID-19?

The lodging industry is   struggling   to fill the empty rooms in 2020. For months, U.S. hotels are running at an occupancy of 50% or lower.     Not every segment   suffers the same impact from the pandemic, however. Demand for   home-sharing  facilities had already bounced back over the summer. Airbnb reported a higher booking than last year. Marriott’s home-sharing arm is also doing well, seeing a sevenfold increase in booking over last summer.     Similar to what a residential rental or home-sharing facility   offers , guestrooms in extended-stay hotels also feature a full-size kitchen or a kitchenette. Extended-stay hotels are designed for travelers who want to stay at a “home” when away from home. A guestroom at the Residence Inn Miami Sunny Isles Beach   Extended-stay hotels vs. home-sharing facilities     Because COVID-19 is primarily transmitted through direct or indirect human contacts, people are highly encouraged to avoid unnecessary human interactions, leading to more   con

Will restaurants of the future still need a dining room?

It does not seem the coronavirus is leaving us soon, although we have seen good   progress in developing the vaccine . In recent weeks, many places reported   a surge of new infected COVID-19 cases . Some even resumed   lockdowns   and the mask-mandate order, forcing restaurants to   shut down indoor dining   services again.     As a short-term remedy, restaurants immediately shifted their offering to   curbside pickup and delivery  services. Meanwhile, restaurants are testing new concepts to embrace the   contactless self-service  trend for the future. Here are some examples,     Chipotle opened its first digital-only restaurant     The new prototype, known as the   Chipotle Digital Kitchen , debut in Highland Falls, NY, earlier this month. Different from the traditional Chipotle restaurant, the Chipotle Digital Kitchen features:     A lobby designated for pickup services through off-premise orders.   A see-through kitchen, allowing customers to see, smell, and hear what is going on b