Marriott reported second quarter profits last week that beat analysts expectations. Arne Sorenson, Marriott’s CEO, stated room rates will likely rise by the end of 2010 with the resurgence in corporate bookings. Hoteliers are optimistic that the industry will avoid a double dip recession. Increased room demand from business travelers will allow higher rates going into 2011.
Luxury and upper upscale hotels are seeing the greatest improvement in rates and occupancy. Occupancy in the luxury hotel sector has increased by about 10% in the first half of 2010. Luxury hotel segment room rates from June data for the US shows a 4.7% increase in average room rates to $236.59. Some analysts believe the luxury segment will aggressively push rates upward and the more success the luxury segment has in raising rates, the more room there is for upward pricing of upper upscale hotels ($146 in April 2010).
Recent data from STRGlobal indicates virtually all the USA room rate increases in June 2010 were in upper end hotels and New York City.
The Big Apple bargains of 2009 are dropping from the tree as New York City is once again taking a big bite out of hotel guests’ pockets. New York saw double digit increases in room rates for June 2010 compared to a year ago, the largest increases in hotel rates for the US. The average rate for all segments of hotels in New York City is $230. Other places with brighter scenes for hoteliers are Chicago, Minneapolis, Denver, Oahu, and Boston.
So what about the leisure traveler?
For hotel deals you might want to look to New Orleans. Room rates in New Orleans have seen the largest decrease for top US cities in the past year with average rates at $105.
Blame the oil dip stick for New Orleans woes!
The good news?
The economy segment hotels had the largest average rate decrease for June 2010 with rates down to $51.19.
Oh yeah! Back to Arne Sorenson’s financial report last week. Even though corporate and premium room rates saw double digit growth this year, there are still about 15% of Marriott rooms listed at a discount.
So the deals are out there. You might just need to search a little harder to get luxury on a budget as we go forward in this improving upper upscale and luxury hotel economy.
Sources:
Washington Post – Marriott plans higher room rates to match uptick in corporate travel (July 15, 2010)
STR – Chain scales post mostly positive June results (July 20, 2010)
Hotel World Network – Data shows clear evidence of accelerating recovery (July 15, 2010)
Hotel Interactive – Luxury Stages a Comeback (June 22, 2010)
Robert Reich – Slouching towards a double-dip or a lousy recovery at best (July 3, 2010)
