Oct102008

Luxury Hotels – “Show Me the Discount”

Luxury Hotels – “Show me the Discount”

The hotel industry strategists urged full steam ahead in early 2008 when faced with any discussion of a world recession and that “d” word.  I am talking about “discount” room rates. 

Shhhh. 

The “d” word can’t be spoken too loudly inside the hotel industry.

Wall Street and the hotel industry have been taking a bath with our cash for five years.  Except for the slight downturn in 2001-2003, hotels have been raising the cost of rooms every year for the past decade and now they are through the roof…or at least to the 7th floor.

I am not Jerry McGuire.  You can yell “Show me the money!” all you want. 

I’m yelling back, “Show me the discount!”

We need a win-win negotiation here.

I rant on and on about the high cost of hotels.  In a world where many leisure travelers and business travelers have watched their retirement tossed out with the bathwater in 2008, the discussion in the hotel industry that rate increases will have to be moderated this year just pisses me off.

You have to wonder how bad things really are when you watch your savings portfolio crash 20% in a week.  

What the hell.  Go traveling.

All year long the industry talk in the media has been how luxury travel is immune from the economic downturn. 

Several articles I’ve read in the past twenty-four hours suggest the media is peddling a different tune in Black October 2008.

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Some people don’t just travel , they travel well…

well, expensively.

 

The Miami Herald ran a story October 8, “South Florida Luxury Hotels Tested in Hard Times”. The Setai Hotel, South Beach, Miami has standard room rates of $1,100 per night.  The sales director says room rate discounts to $620 per night, normally only offered for weekdays, may have to be offered on weekends this  winter season to attract guests.

I am thinking European repeat visitors to the USA may now feel what Americans have experienced in trips to Europe and many other countries where the US dollar declined in value over the past few years.  1000 Euros is only worth $1,368 today, about $200 less, or 13% less than it was three months ago ($1,574 July 9, 2008). 

Miami has had several new luxury hotels open in the past few years with all the major chains buying a piece of the real estate.  Fort Lauderdale has Starwood’s new W Hotel, and the St. Regis Fort Lauderdale rebranded as a Ritz-Carlton, a Marriott hotel .  Hilton has the Fort Lauderdale Beach Resort and Miami has two InterContinental hotels. 

Luxury hotels are abundant in south Florida.  This location may be the bellwether location to watch for luxury hotel trends in 2009.

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The Wall Street Journal has a good read on Caribbean hotel discounts, “Silver Lining for Vacationers in the Caribbean,” by Sarah Nassauer.  The article states Puerto Rico hotel rates are down 11%, and Punta Cana on the Dominican Republic is down 16% from this time last year.  The Caribbean may be like 2005 was for housing.  Signs of a turbulent hotel elevator ride ahead. 

Last month I blogged about the global hotel report by Smith Travel Research showing the Caribbean had the only decline of average room rates over the past year.  Airline service cuts, higher airfares with all the fuel surcharges, and already over-priced hotel accommodations have led to tough times. 

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And winter 2009 should be worse I predict.

The Europeans and foreigners with stronger currencies than the dollar helped boost tourism in Caribbean locations with European ties.  European visitors to Aruba in the Netherland Antilles have seen the Euro drop 13% against the US Dollar in the past three months.  And the US Dollar is the major transaction currency for hotels in the Caribbean. 

A 5% hotel room rate cut to $400 per night for a Caribbean beach resort in November 2008 will still cost $50 more per night for a Euro-spending European than it was in July 2008.

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Joe Sharkey’s New York Times article, “ Travel Industry Shaken by Economic Downturn” cites patterns of luxury travel decline.  British Airways, the grande dame of European luxury air travel, has seen almost a 9% decline in the past year for its long-haul premium travel.  Even Singapore Airlines is offering premium flight discounts as the tiny financial powerhouse island-country of Singapore joins New Zealand as the second major Asia Pacific country to officially go into economic recession. 

Upscale hotels are impacted too.  Sharkey’s article cites Bjorn Hanson, New York University professor at Tisch Center for Hospitality, saying hotel cancellations for full-service hotels have been running about 50% above normal for the past two weeks.

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Pebble Beach Lodge and Golf Resort sent me a special offer for two nights with two rounds of golf and a complimentary room upgrade starting at $2,000.  I guess they didn’t read my blog post, “$8 Cups of Beer!  Pinch me, I’m Luxuriating,” written after the ATT Pro-Am last February.  (I changed the title last month to “Monterey County Luxury Hotels” to enable better search engine optimization.)

If you want to learn more about the Pebble Beach offer you can call 1-800-877-0279 and ask for code “PGECP8”.  Book by October 21 to get the added bennies.

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Ritz-Carlton Hotel, Half Moon Bay, California

Ritz-Carlton Spa and Golf Resort, Half Moon Bay, California

And then there is the AIG fiasco last month at the St. Regis Monarch Beach in Dana Point, California.  I was interested to read in the LA Times yesterday, David Lazarus’ Consumer Confidential, that AIG had another company event planned for the Ritz-Carlton Resort in Half Moon Bay, California next week. 

I was thinking we could organize a beach blanket protest using the California Coastal Commission’s public access to the beach (explained here) for some consumer advocacy and fun in the sun.

The cancellation of the AIG event at the Ritz-Carlton Half Moon Bay was just announced this morning.  Power of the media.  Power to the people.  Our tax dollars shouldn’t be funding golf excursions.

Attention AIG executives!

Loyalty Traveler has a great tip for a Pebble Beach golf getaway – but, please pay on your own dime.

And this takes us back to the downturn in luxury travel.

$500,000 luxury meeting getaways will likely be scaled back dramatically over the next year as this financial crisis winds its way through the travel industry in 2009.

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The good news? 

Loyalty Travelers will find hotel bargains in 2009.

Hotels are looking more to consumer groups for targeted hotel rate discounts. 

My wife just turned 50.  She was surprised I hadn’t gift-wrapped an AARP card for her birthday present.

Honey, I think I have already picked out your Christmas gift .

 

 

 

About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

More articles by Ric Garrido »

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Comments

  1. I love Pebble Beach for its beauty and its suucessful display of corporate capitalism.

    Pebble Beach is so far out of my economic status that I can’t even consider a night at their resorts. I was disappointed that I had to catch a flight to Europe when a friend invited me to the 18th hole main suite of the Lodge back in 2005. I would have liked the photo opportunity.

    The Pebble Beach golf deal is a great deal compared to their prices earlier this year. An upgrade to an ocean view room would mean a guest would get about $800 in free golf play at Pebble and Spanish Bay for the same price as rooms only were selling last year.

    Pebble Beach helped me in college in the early 80s when I worked there part-time while attending UC Santa Cruz. Oh to remember those days of sleeping in my car in the UCSC parking lot after Chemistry Quantitative Analysis labs on Wednesday night and lectures on Thursday morning.

    One of the best seafood meals I ever had was when the chef of Club XIX refused all the scallops in the commissary and instead of throwing them out I cooked an incredible bisque for the family dinner. Tasted fine to us.

  2. This time everybody is taking the hit, very few fortunate people will not be affected or not to the extent they will have to change their life style. I expect some fall in demand and prices moving down also for the most luxurious hotels. See http://www.sublimehotels.com/ for prices and discounts.

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