Feb222010

A Hotel Executive Lounge May Be Closing Near You

Reuters Travel and Leisure Summit is happening in New York City Feb 22-24. So far I have seen nothing new coming out of the conference reports, but I guess it is news to lots of people.

There is a lot of chatter about rivals going after disgruntled Hilton HHonors members. Here is a good read from Deena Beasley mentioning  HHonors executive lounge closures.  And this quote regarding the recent hotel category shift across the chain from Hilton’s senior VP of global customer marketing Jeff Diskin, “We had an increase in free night redemptions. We did see a need to recalibrate.”

The comments by Henry Harteveldt, a highly regarded travel industry analyst at Forrester Research, and Bjorn Hanson, hospitality academic at NYU, indicate there may be a trend toward executive lounge closures in hotels. Some hotel management view guest lounges with free breakfast, appetizers, and personnel as an unprofitable expense. 

Interestingly there are two arguments being played out in these loyalty program stories.

  1. Loyalty program members are important revenue sources to the hotel chains.
  2. Frequent guests are less profitable to the chain due to savvy travelers gaining benefits and free nights, while often paying some of the lowest rates offered by the hotel rooms. 

I plead guilty. I call it smart shopping. Value is important to me since every purchasing decision means something else I desire doesn’t get bought.

Perhaps hotel lounges will remain a part of international travel, just not so prevalent in the USA.

Could the airline model of paid lounges for USA and complimentary access for elites when traveling internationally spread to hotel loyalty programs?

Despite all the gloomy outlooks there is another bright spot for Starwood Preferred Guest Platinum elites who will receive free internet access at any Starwood Hotel beginning March 1, 2010.

I think that rule change just saved me $50 next week. I might be able to afford the hotel restaurant this trip.

Providing of course the hotel has not shut down the restaurant during my stay.

Reuters Travel and Leisure Summit stories:

Repeatedly mentioned in these stories is the fact that hotel growth is primarily international and the US is the worst performing hotel market globally. Unfortunately for the hotel chains their properties are predominantly located in the USA with most major chains having 75% or more hotels in the US.

“Travel Companies Grapple with New Normal” text story.

 Travel industry outlook for 2010 video.

(video length = 5:46 min)

Discusses hotels, airlines, and Las Vegas hotels and convention business.

Finishes with forecast of well-financed public hotel companies buying out private hotel companies.

Expedia and Priceline executives discuss “Online travel bookings shift overseas” in this piece by Kyle Peterson. 

Starwood discusses growth in China in this story and an interesting item is 40% of Starwood bookings are happening in emerging markets. China could become Starwood’s largest market after the USA in a few years.

February 24, 2010 – Barbara DeLollis, Hotel Check-in blog at USA Today wrote the piece on hotel lounge closures Feb 22 that got me following this topic and yesterday she followed up with another post showing anecdotal evidence and comments confirming changes are happening.

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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