New York Times published a news article last week on the state of the hotel industry, “Terrible Timing for a Hotel Boom”.
Some interesting data:
– Across the USA occupancy levels are down 5% from 2007.
– New York City is the nation’s bright spot with high hotel rates and high occupancy. Foreign tourism is benefiting New York City.
– 2007 was the year of record profits for the hotel industry. No wonder. 2007 was the year of record room rates for the hotel traveler.
– 6,000 new hotels with 800,000 rooms are in some development phase.
– 2,000 hotels are currently under construction, but many of the other 4,000 planned hotels may be slow to develop. A few months ago I carefully went through the Starwood web site and there were 100 or so hotels with web sites although some of these hotels were not scheduled to open until 2010 or 2011.
– 327 hotel projects have been canceled in the last three months.
The New York Times article quotes an academic, Professor Bjorn Hanson from the Tisch Center for Hospitality at New York University. He warns the good times for New York hotels at the present time can see a severe downturn with continued poor economic times. The effect of fewer city hotel occupants means neighboring businesses feel the economic ripple. Many cities are already experiencing this impact.
Dr. Hanson says hotels tend to break even at 54% occupancy and that reminds me of the many articles I have been seeing about Hawaii hotel occupancy declines the past two months.
The decline in flights to the Hawaiian Islands has helped bring the average hotel occupancy on the Big Island of Hawaii down to 57% for June 2008. Despite the low occupancy on Hawaii, the average room rate is still $202. Oahu is the bargain island at $173 compared to Maui’s $278 average hotel rate, and Kauai at $219.
Tim Winship posted an article on SmarterTravel.com “How to Evaluate Frequent Flyer Promotions”. This is a great read and the information applies equally to hotel frequent guest programs. My interest with Loyalty Traveler is to evaluate hotel loyalty program special offers and provide that information in summary form to hotel travelers.
“But whether you’re a member of the Pudding Club or just an average consumer looking to do the smart thing, mileage-wise, it pays to do the math.”
– Tim Winship
I could not agree more whole-heartedly.