Several articles appeared recently in publications that we follow as part of our hospitality consulting services advising clients that suggest now is the time to raise hotel room rates incrementally to recoup what was lost by many hotels since 2007. Of interest were several panelist comments interviewed by Hotel Interactive saying that adding a few bucks to your room rate and continuing to raise it slowly is not only a good idea, but it is now also imperative if gains are to be realized in the next 1-3 years. For example, some of the commentary includes:Hotel Pool Bar – “Douglas K. Shifflet, chairman & CEO, D.K. Shifflet & Associates, says there is a predominant myth that RevPAR is low because the industry simply can’t raise rates. That is simply not true.” – “Consumers realize the cost of business is going to up,” says Mark Woodworth, president, PKF Hospitality Research. “And once a consumer sees they can’t get what they want when and where they want it, they conclude they have to pay more.” – “According to Mark V. Lomanno, president, STR, lodging demand has come back almost all the way to where it was before the downturn. In July 2010, more rooms were sold than any month ever in the lodging industry. Transient leisure and transient business are back to where they were or higher” – “Hubert Joly, president & CEO, Carlson Hotels Worldwide, says corporate travel in particular has returned to levels not seen since the downturn began. Corporate travel is back; we took a beating in 2009. It is back, vibrant and growing in the teens.” – “PKF’s Woodworth sees the lodging industry is heading in the right direction. “We think the industry has come off the bottom and we are moving through the trough.” Read the full article here: Why Experts are Begging You to Raise Rates. The commentary from these hotel analysts and executives signal to us as part of our hospitality consulting update that demand (i.e. occupancy) is on the rise going into 2011. It also suggests that since supply is not growing as reported in our previous blog, that the downturn in overall hotel occupancy and average rate has reached a plateau and can only go up with the economy improving, albeit slowly. In essence from a hospitality consulting perspective, consumers and business travelers alike will expect to pay more, especially during the mid-to-high travel seasons in many markets. However, some markets that are still significantly overbuilt, like Las Vegas where there are plenty of rooms vacant, will continue to discount room rates to bolster room occupancies year round.
