Fairmont's Tom Storey says hotels haven't yet raised rates.
The latest projections from PKF Hospitality Research show amazing revenue growth on the way for hotels — a 10.2 percent increase in(revenue per available room). In 2012, that is.
At the moment, however, the hotel industry is well into yet another year of declining RevPAR (PKF-HR sees it falling 1.1 percent in 2010), as it waits for income and employment gains to take hold in the United States. Still, the trend is one of gradual improvement — “a strengthening story,” in the words of Tom Storey, president, Fairmont Hotels & Resorts. Storey recently spoke with RCM about the hotel company's current situation and future plans — and what smart meeting planners are doing right now.
RCM: How do the numbers look for Fairmont properties in 2010?
Tom Storey: We turned a corner toward the end of the third quarter last year from a booking pace perspective, and growth has been continuing into 2010. We are getting good interest in business in 2011 and 2012.
RCM: Are you still seeing short lead times?
Storey: Planners are confident taking a wait-and-see attitude because there is availability. They feel they can still look around and maybe get a better rate. But as demand comes back, lead times will lengthen because it won't be as easy to place large meetings. Look at North America — there are not a lot of new hotels. Supply is relatively constrained, especially at the high end of the market. So demand doesn't have to come back too much to restrict choices. Also, as demand comes back, the hotel industry will be able to get more aggressive on rates. My point of view is that the smart planners are already booking 2011 and 2012 in order to get ahead of that.
RCM: When do you see rates trending upward again?
Storey: It is likely that in 2011 rates will increase because of two factors. First, an increase in transient business travel will reduce availability in hotels and, second, as meetings business picks up, hotels will be more confident asking for higher rates.
RCM: What will drive group business going forward?
Storey: You need to look at what's going on in the general psyche. When things are good, people spend money and take risk. When things are bad, they avoid risk. It's true for organizations too. But those organizations that are forward-thinking recognize that it's at the bottom of the cycle where the most value is created.
RCM: What's in the Fairmont pipeline?
Storey: I am excited about our new properties in Vancouver [British Columbia] and in Pittsburgh. Eighty percent of our new properties are international. In the U.S., we continue to focus on key markets like Las Vegas, Atlanta, and Orlando.