Dec012009

2010 the Year of Value

Hotels, the magazine of the worldwide hotel industry, posted an article yesterday on www.hotelsmag.com – Value to Remain in Vogue in U.S.

Not so surprising survey result for this loyalty traveler is the “household budget” remains the primary deterrent to future leisure travel.

The most significant decline in leisure travel is expected among Gen X and Gen Y, in other words, pretty much anyone under 45 years of age. Older people are expected to travel more in 2010.

“I’ve got no job, I’ve got no career, and the house is always a mess!” was the phrase my two-year-old niece repeatedly espoused last Christmas with extended little arm gestures. 2009 brought that toddler’s video mimicking gestures to reality for so many people in the U.S.

Leisure travelers are expected to be the majority of travelers filling hotels and planes with business travel flat for 2010. 53% of U.S. households say they are planning a trip by April 2010. One year ago that number was 56%. Let’s say there are 100 million housholds. 3 million fewer trips is a significant decline over the past year and a tough forecast on hotels over the next six months. Business travelers report only 18% of adults planning at least one business trip by April 2010 and 24% state fewer business trips are projected over the next six months.

The rather bleak outlook from the Travel Sentiment index  leads me to Joe Sharkey’s New York Times piece of November 23, “For the Hotel Industry, Recovery is a Long Way Off.”

Joe interviewed Lalia Rach, Dean of the Tisch Center for Hospitality, Tourism, and Sports management at New York University. I particularly like this comment from her, “The American consumer now really understands the quality-value price equation, and I’m not sure that has sunk into the hotel industry. That is the new normal.”

Hotel occupancy projected at 55% in 2010 is at lows only matched by the 9/11 aftermath and the Great Depression of the 1930s. Room rates are predicted to continue falling as hotel discounting is likely to be the norm for 2010.

Another piece in the New York Times by Elizabeth Olson, “Hotel Chains Try New Ways to Earn Loyalty” came out yesterday. Her article cites Forrester Research travel analyst Henry Harteveldt as saying only 36% of business travelers are brand loyal in 2009 compared to 42% two years ago.

In my head I guestimate 20 million business travelers (20M is just my estimate and not based on any source). The 6% overall drop in business traveler loyalty means hotel loyalty programs have lost around 15% of their business traveler customer base in the past two years. This amounts to around 1.2 million business travelers having dropped brand loyalty in the past two years in a market segment of 8.4 million business travelers who had hotel brand loyalty.

The Travel Sentiment index cited earlier stated leisure travelers will be filling the rooms and planes in 2010.

My Loyalty Traveler conclusion is leisure travelers can expect to be targeted by high-value hotel loyalty program promotions in 2010.

And if 2009 was a leading indicator of the travel industry forecast, then 2010 is the Year of Value.

 

 

 

 

 

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.

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Comments

  1. Too bad Hilton HHonors doesn’t understand this as they quietly go about devaluing everyone’s points by 25%.

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