It's no secret that the hospitality industry continues to flounder as we head into 2002. PricewaterhouseCoopers' (www.pwcglobal.com) forecast as of the end of November points out the significant losses hotels will be looking to recoup in 2002: 15 percent declines in revenue per available room for the fourth quarter of 2001, the worst reported in 34 years. According to the MPI Foundation, meeting cancellations cost more than $1 billion in lost business in the U.S. in the three months following the attacks.
Mark Lomanno, president of Smith Travel Research, says STR is predicting occupancy overall for 2002 to be at 60.3 percent andat $52.16 through year-end 2002. “The best-case scenario is that things will get better by February or March, but we really don't expect that to happen,” Lomanno says. “We're projecting they really won't pick up until mid-summer.”
But the travel and hospitality industry is gaining hope from a $20 million television campaign that features none other than President George W. Bush as spokeperson. The campaign kicked off in November under the auspices of the Travel Industry Association of America. In the meantime, convention and visitors bureaus from St. Louis to San Francisco are running marketing campaigns to woo the local drive-in market to make up the shortfall. (See page 21 for more on the burgeoning regional meetings business.)
At the hotel level, many are promoting their properties in second- and third-tier cities as “safe places to visit and hold events at a reasonable price with ample amenities,” says Michelle See, sales manager with the Clarion Hotel Worthington in Worthington, Ohio. Other hotels are giving unprecedented deals, like the St. Charles, Ill., Pheasant Run Resort and Spa, which is offering up to $2,500 in cash back to planners who book reservations for 75 or more room nights.
Some planners worry that layoffs and cutbacks in the hotel sector will mean reduced services, but to date that hasn't been an issue. Laid-off staffers are still on call for meetings, which can be planned for in advance. A PwC hotel guest survey did find some changes, such as restaurants reducing their hours, but with a buyer's market looming, expectations are that hotels will continue to do their best to hold to their previous service levels, though they probably won't be adding any amenities until the economy turns around.
The travel, tourism, and hospitality industries also were lobbying hard for economic stimulus legislation as AM went to press at the end of November — among the numerous proposals hoped to pass before 2002 were tax credits for those who purchase travel packages; a reinstatement of the 100 percent tax deduction for business meals and entertainment, and the introduction of spousal travel deductions for meetings and conventions.Mark Lomanno: maybe mid-summer rebound Extra Credit?