Survey Says Consumers Planning to Travel
After one of the worst years in hotel industry history has finally come to a close, any and all positive signs are worth noting. A recent survey by Deloitte offers hope that the beleaguered tourism, hospitality and leisure sector might be poised for a turnaround. Almost half (45 percent) of 2,000 consumers surveyed in November said they would take a vacation or leisure trip involving a hotel stay this winter.
Adam Weissenberg, vice chairman and U.S. leader of the tourism, hospitality and leisure sector at Deloitte, said the survey results were positive. He said leisure travel is on the upswing—in large part due to hotels’ aggressive marketing and use of incentives—and the industry had finally hit bottom. He felt 2010 would be flat and hotels might see an uptick in rate during the second half of the year. We recently chatted by phone with Weissenberg to get his take on the travel industry and what hotel owners and operators should understand about the recent Deloitte survey.
Are things starting to stabilize in the hotel and travel industries?
Things aren’t getting any worse. From what I’ve seen we’re starting to approach the bottom or near bottom of the cycle. Occupancy is starting to come back. There’s more leisure travel and some slight increases in business travel. Some of the reins that were tightened in the first quarter of last year when all the cutbacks came are starting to loosen up. There’s some small group activity. But we’re still missing rate, which has not come back, so revenue is impacted. Everyone is purchasing the same room at 20 percent to 30 percent less than a year ago, or getting some kind of incentive.
How do discounted rates and all these incentives we’re seeing factor into the equation heading into the new year?
From the business point of view, (corporations) are just looking for flat rate reductions. Big companies that have a lot of travel that are just concerned with cost are saying if I can renegotiate my major contracts for 30 percent, great. They don’t care about incentives; they will take them, but they’re primarily looking for rate reductions. On the flip side, for the leisure traveler it probably doesn’t make that much of a difference if you get 30 percent off a room or a night free, or a $150 resort credit. Everyone just wants a deal and everyone expects something. That’s the mindset of the leisure traveler and great deals are out there. And I think consumers on the leisure side are taking advantage of that.
How do you see this year compared to last?
I know STR and PKF have predicted a small decrease in RevPAR, but I think we could end up (this) year relatively flat. In the beginning you might see a leveling off, maybe a slight reduction, but I think we’ll start to see demand pick up in the second half of the year. If things are starting to pick up quicker than we think, the second half of the year could start to see some slight rate increase.
Should those survey results instill some confidence to hotel owners and operators?
In what my expectation was, those are good numbers, relatively. Feeling a fair number of people will travel and stay at hotels—that’s positive. Earlier we heard no one was taking any trips, so seeing that heading into the first part of the year is good news.
What about group bookings?
That’s still down with big groups. Pre-booking at big convention cities is down significantly. A year ago the business was on the books. It’s going to take at least another year to see an uptick in big group business. That’s directly related in my mind to a business saying ‘OK, you can go to that conference in Vegas, Orlando or Washington, because we can spend money on that and increase our travel budget.’
So now that 2009 is over, how would you classify it?
It was absolutely horrible. Terrible. Everyone wants it behind us and to move on. It was one of the worst years anyone has seen in a long time: a drop-off in occupancy and rate, more competition, lots of debt on the books, airlines cutting back capacity, the economy suffering. It made it a really tough year for everyone.
It was also the year of Twitter, iPhones and Apps (57 percent of survey respondents said they read consumer reviews online, 41 percent use mobile devices for travel-related assistance and information). How have hotels responded to the new digital traveler?
They’re trying. I think the use of technology—Twitter, Facebook, iPhone apps—is gaining more and more in popularity. Three years ago, Twitter was nothing. The changing pace is extraordinary. The challenge is to stay up with it, but (hotels were) so focused on controlling cost and keeping levels of service up in a challenging environment, (this) year everyone will take a deep breath and focus on the strategy of how do we connect with our customers. There’s a big opportunity there.
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