Due to woes within the airlines industry, PKF Hospitality Research is indicating U.S. hotels could face a decline in lodging demand greater than that experienced during the turmoil following the terrorist attacks on September 11, 2001.

Under a worst-case scenario, says HotelBusiness, a 1% decline in the number of seats flown within the U.S. will result in a 0.39% decline in the demand at the nation’s hotels. These findings come from an in-depth econometric analysis performed by PKF Hospitality Research.

“Many industry participants have been speculating about the spillover effect a deteriorating airline industry will have on hotels,” said Mark Woodworth, president/PKF Hospitality Research. “Our research measured the historical relationship between these two components of the travel industry. This allowed us to project just how much business hotels stand to lose given the cutbacks in capacity announced by the major airlines.”

Using historical data from Smith Travel Research, Moody’s Economy.com, and the Department of Transportation, and controlling for the effects of changes in income and employment, PKF-HR found what many intuitively believe: a highly significant relationship exists between available seats and hotel room night demand.

“Based on our findings that a 1% decline in available airline seats results in a 0.39% decrease in hotel demand, if airline capacity is reduced by 10% as some have suggested, then lodging demand would fall off 3.9%. To put this in perspective, the decline in lodging demand experienced in 2001 was just 3.3%,” Woodworth noted.

One impact on soaring gas prices: more travelers are looking to join group tours says TravelMole.

“Travel agencies say their group tours are filling up pretty quick,” says KHAS-TV in Hastings, Nebraska.

Group tours are becoming a trend this year as gas prices continue to soar. The increase in gas and airline tickets has many travelers taking advantage of motor coaches, say travel observers.

”The agencies are offering group rates that some people just cannot resist,” says KHAS.

One travel agency said business is up 10% over last year at the same time. Several local businesses have also been using motor coaches to take customers to events and attractions.

[Back To Top]

Hotels Feeling Chill In Tourism

The tourism industry appears to be slipping for the first time in recent years, slowed by a potent cocktail of rising airfares and falling economic fortunes. And the slide is likely to intensify this fall as airlines slash their flight schedules reports the Chicago Tribune.

Downtown Chicago hotel occupancy rates dipped to 65.2 percent during the first five months of this year, from 67.4 percent in the year-earlier period — the first erosion of strength in such a time frame since 2004, according to data from Smith Travel Research.

Nationwide, hotel occupancy dropped to 66.7 percent for those months, down from 68 percent in the year-ago period.

Coming off several strong years, hotels likely will see occupancy rates downtown and nationally drop by 2 percentage points this year, though prices should hold strong, said hotel industry expert Ted Mandigo.

Some observers see a potentially harsher scenario. "This is the bow wave, and the rest of the wave will wash over," said airline industry analyst Robert Mann, president of R.W. Mann & Co. in Port Washington, N.Y. "Most of the effects won't be felt until after the big schedule cuts this fall."

The pain is expected to be most deeply felt in leisure destinations such as Las Vegas and Orlando, as airlines cut service more deeply to destinations that draw flocks of tourists seeking cheap flights, he said.

[Back To Top]

The Seattle Post Intelligencer says that despite the weak U.S. dollar, a boom in international travel around the world hasn't translated into a surge of foreign tourists to the United States.

Explanations range from post-9/11 security headaches and lower airfares elsewhere to poor marketing by the U.S. Whatever the cause, travel industry experts say the U.S. is missing an opportunity to make up for the shortfall in domestic tourism caused by high fuel prices.

Heli USA Airways is one of several operators that whisk visitors on aerial tours of the Las Vegas Strip and nearby Grand Canyon. The airline's vice president of marketing and sales, John Power, said the faltering U.S. economy and competition from other countries are crimping business.

"Right now, there's some other worldwide destinations that are taking some of the marketplace," Power said.

According to the U.N. World Tourism Organization, the United States had 51 million international visitors in 2000, more than 7 percent of the 682 million international arrivals worldwide. But as those travelers jumped to 846 million in 2006, the U.S. saw roughly the same number of visitors as it used to — dropping its share to 6 percent.

The U.S. share of international tourism dollars has slipped too, though the U.S. still drew more money than any other country in 2006 and more than it did in 2000. From 16 percent of the market in 2000, or $82.4 billion, the U.S. took in 12 percent of the $733 billion worldwide tourism market, or $86 billion in 2006.

Major destinations such as Los Angeles, Orlando, San Francisco, Miami, Honolulu, Las Vegas, Chicago, Washington, D.C., and Boston all saw 20 percent to 34 percent fewer travelers in 2006 compared with 2000. Of the top 10 cities, only New York saw more visitors in 2006 than in 2000, with a 9 percent increase to 6.2 million arrivals, according to the U.S. Commerce Department.

Nearly 26 million people traveled to the United States from overseas in 2000. But that dropped drastically after Sept. 11, according to data from the Commerce Department's Office of Travel & Tourism Industries. The number bottomed out in 2003 with 18 million overseas visitors, and, with 24 million last year, still had not returned to previous levels. The figures do not include visitors from Canada and Mexico, whose numbers are up substantially from 2000 but who tend to spend less than other international travelers to the U.S.

New Hotel Chains Offer Eco-Chic, Hip Value

In a tranquil wooded setting near Minute Man National Historical Park, not far from where the first shots of the Revolutionary War were fired, two new hotel chains are aiming to make history, too.

Starwood Hotels & Resorts' 123-suite Element Lexington, the first in a pioneering built-from-scratch eco-conscious chain, opened last week. So did Starwood's 136-room Aloft Lexington across a shared courtyard. It's the fourth in a brand dubbed "W lite" by industry observers.

Each has a different mission says a recent article in USA Today. Extended-stay brand Element, affiliated with Westin, hopes to attract business travelers and value-minded families who want kitchen facilities. It's a laboratory for the greening of hotels throughout the Starwood empire.

Aloft (as in "a loft") is designed to offer the fun and cutting-edge cool of its forerunner, W Hotels, at a wallet-friendlier price. It's targeted at Gens Y and X and hip oldsters. Aloft rates are due to average $150; Element suites, $165 (including a hot breakfast). But both (alofthotels.com and elementhotels.com) have introductory specials, and rates vary by market.

The two so-called lifestyle brands are trying to tap into the needs of guests who want modern bells and whistles with value and to siphon customers from competitors in the select-service market — both have no room service, doormen or three-meal-a-day restaurants. Element competitors include Residence Inn by Marriott, Hyatt Summerfield Suites, Hilton's Homewood Suites and InterContinental's Staybridge Suites. Aloft is vying with Courtyard by Marriott, NYLO, Hotel Indigo, Hilton Garden Inn and Hyatt Place, among others.

Rising prices are affecting the travel plans of most consumers this summer, driving a growing number online to ferret out bargains, according to a recent poll by lead-generation firm Prospectiv.

About 79% of the 500 consumers (drawn from Prospectiv's opt-in consumer preference database) responding to the online poll confirmed that costs are influencing their vacation plans — and 38% said they'd be going the "staycation" route as a result, meaning they would spend their vacations at home.

According to Marketing Daily Prospectiv conducted the poll in conjunction with its release of a customer acquisition database based on opt-ins to a new e-newsletter, Eversave Travel, which offers travel and hospitality information and promotional offers.

While its hardly surprising that record gas prices are consumers biggest travel cost concern, the fact that a whopping 84% cited gas prices, versus a mere 8% and 7% citing lodging and food costs as their biggest worries, is "a bit astonishing," observes Prospectiv President and CEO Jere Doyle.

"You rarely see one choice within a multiple-choice question pull that dominantly," Doyle notes. While the cumulative impact of cost-of-living increases is the underlying driver of plunging consumer confidence levels, "clearly, gas is now a leading indicator of consumer attitudes and behavior-something that registers heavily on consumers as they fill up their tanks once or twice a week," he says.

Combating Recession: The Time For Incentive Progression

Call it what you want — these are rough times. Recession or not, people are making changes to their daily routines to save everything from the environment to a few bucks. The question is, are these sacrifices cutting your brands from consumers' things-to-buy list?

We're all feeling the pinch. Airlines are charging for checked bags and the price on everything from diapers to table salt is rising. Corporations can no longer eat the rising energy costs, and it has to be picked up by somebody: the consumer.

To help consumers look beyond the price tag, says ManageSmarter, companies have to come up with creative ways to increase brand loyalty — and nothing drives business like incentives. Incentives are critical during economic down times. If nothing else, incentive programs should be strengthened in times like this. Why? Because consumers are paying an arm and a leg for necessities like gas and food, making them more and more conscious of what they're spending on other "luxuries."

Offering incentives can help guarantee consumers stay loyal to one brand over another. But doing it right takes time, research, and know-how. It's important to know the target audience, and to know what it takes to motivate them.

Take something as simple as a bottle of soda. There are plenty of different brands to choose from and they all cost about the same. What can one brand do to create a loyal customer? Reward them. The leading beverage companies are putting points under the bottle caps, which can be banked and redeemed for merchandise rewards — the "if you stick to one brand, you'll earn points faster" philosophy.

In order for this approach to be successful — and generate continuing consumer participation via point increments — the reward offerings must be aspirational and attainable. By offering a range of merchandise rewards that includes everything from golf clubs to designer handbags, trendy earphones and exercise equipment, the same incentive program is now appealing to an unlimited audience.

But with an unlimited audience comes some more curves to take into consideration. Since your audience now really is unlimited, it's important to remember that the average American household belongs to a dozen loyalty programs. What will make yours better then the rest?

• National Research and Statistics. Get the facts you need to support the trends and ideas you're pitching to media. Put your ideas into national context with notable findings of the comprehensive 2008 Lodging Study and studies on economic impact of hotel room taxes and technologies. Studies can be downloaded from the Publications section of the Members Only site.
• AH&LA National Position Statements. Bedbugs in hotel rooms; immigration reform; general security concerns. AH&LA has taken an official position on numerous newsworthy topics and issues. Which can be used as is or customized for your needs.
• Recommended Action Response Plans and Speaking Point Guidelines. When faced with a crisis situation, these valuable action plans provide detailed strategic advice for developing your own crisis communication plan and effectively communicating your position to the media.
• Press Kit & Release Writing Tips. AH&LA provides guidance on creating a powerful public relations strategy, beginning with a well-written Press Kit and Press Releases.
• Media eALERTS. Subscribe to frequent, timely alerts delivered directly to your inbox notifying you when journalists are seeking expert comment or information for their stories. Great resulting media hits will be featured on the AH&LA public Press Room site.
• Media Advisories. Advisories of pertinent media coverage and trends on industry issues affecting your business - from how you can help California's wildfire victims to keeping you up to speed on the spread of "dirty glasses" coverage last winter.