"This economy has not been good for the travel industry," said Betsy O’Rouke, senior vice president,, Travel Industry Association of America, at the Hotel Sales & Marketing Association International–New York University Industry Strategy Conference, held last Thursday at the Marriott Marquis in New York City. What an understatement.
The good news for the industry, according to O’Rourke and her fellow presenters--Bjorn Hanson, PhD, Global Hospitality Industry Managing Partner, PricewaterhouseCoopers LLP; Mark Lomanno, president, Smith Travel Research; and Peter C. Yesawich, PhD, managing partner, Yesawich, Pepperdine, Brown & Russell--is that there is no where to go but up. And, the good news for our industry in particular: Meeting business is still the best business for many hotels.
O’Rourke said that business travel will improve in ’04, but that it is "forever changed, thanks to the Enrons of the world. The perk of being a business traveler has diminished. The feeling of being a road warrior has been replaced with finding balance in one’s life. The use of alternative technologies is here to stay," she added. "There is still this unsettling fear, the slightest lingering feeling that something may happen, and it doesn’t take a lot for someone not to go (on a planned trip)."
Both occupancy percentages and(revenue per available room night) are on upward trends in August and September, according to Lomanno. "Demand doesn’t really suck," he said. "But supply is always an issue." In other words, even though the hotel industry is moaning, profits were higher in 2002 than they were in 1996, even though the occupancies were lower. "Things are definitely getting better."
Lommano presented charts that show that weekends are earning higher occupancies and revPAR than are weekdays. Although all recognize that individual business travel is down midweek, Smith Travel does not know or research whether that weekend travel is for leisure, business, or as part of a group.
He added that consumers in general are loyal to their hotel segment (economy, mid-scale, upper scale, etc.), and that they didn’t see a lot of shifting up or down in their research. Echoing that sentiment was Yesawich, whose firm conducts the National Travel Monitor research series on the travel habits, preferences, and intentions of Americans. In the days of Internet travel bookings, all prices being equal, "the best-branded alternative" will always win out, he said.
PwC’s Hanson spoke of the importance of the meetings market to hotels.. "It really is an important market. For most major cities, it is the best market in terms of share of demand and share of revenue." In fact, in 2002, according to Hanson, meeting business accounted for 27 percent of profits at hotels, compared to 20 percent in 2000.
"Our forecast for ’04--and our forecasts are uncannily accurate--shows a 4 percent growth in average daily rooms sold, and a 4.9 percent growth in revPar," he said.