Record openings, occupancy
dip could spur discounting
By Jeri Clausing
Hoteliers, coming off several years
of record growth and profits, are
bracing for the worst in 2009,
when a record supply of new hotels will come on line just as occupancy is falling.
But the bad news for hotel companies is good news
for travelers, who should see not only new choices but
a lot of bargains.
The big question going into the year is whether hotels
will respond to continued declines in occupancy with
the wholesale rate discounting that followed the post-
Las Vegas, Orlando and other resort areas are already
seeing drops in rates. And New York City, which had
seen occupancy and rates skyrocket over the last few
years, is finally getting a little more affordable.
Luxury hotels, which have been hit hardest in the current recession with double-digit drops in occupancy at
the end of 2008, have adopted ski resort tactics in trying
to lure customers with special packages that offer everything from free massages, extra nights and shopping
cards to reimbursement for checked baggage fees.
Still, many industry experts say that if the 2009 econ-
omy is as bad as most expect it to be, it’s not a question
of if but when wholesale discounting takes hold.
New hotels will be opening in record numbers in
2009, the culmination of a three-year building boom
that the industry embarked upon during one of the best
periods in its history.
Globally, 3,185 hotels with more than 500,000 rooms
will open in 2009, according to Lodging Econometrics,
the New Hampshire firm that tracks hotel development
around the world.
The increase in supply, coupled with the drop in demand, will produce a 5.8% drop in revenue per available room, a key measure of industry performance,
according to forecasts from PricewaterhouseCoopers.
That will follow an 0.8% decrease in 2008.
PwC also predicts demand will drop 2%, which when
coupled with a 1.6% increase in supply, is expected to
further reduce occupancy to 58.6%, the lowest since
1971. Occupancy is expected to drop 2.1%.
All of that will add up to a loss of pricing power. PwC
forecasts average daily rates will drop 2.4%.
While paying less, guests will also be getting more as
major chains complete billions of dollars in wholesale
From modern new lobbies at Marriotts to chic Sheratons and Holiday Inns to upgraded amenities, bedding
and technology at properties ranging from Motel 6 to
Hyatt Regency, long-established brands are moving far
beyond their boxy beige roots.
Travelers can also expect to see more emphasis on
In response to the recent terrorist attacks on two
luxury hotels in Mumbai, India, hotels are reevaluating
their security plans.
The international ASIS security group is developing
security guidelines for the hospitality industry that are
expected to include things like more limited access to
hotels through points other than the main entrance,
upgraded fire and life safety systems such as public address systems, better staff training for handling emergencies and better cooperation with government and
In India and other terrorism hotspots, guests may see
new security systems that require them and their bags
to be screened.
But in the U.S. and other developed countries, increased security is expected to remain more subtle and
behind the scenes.
Spanish, U.S. companies
scale back expansion plans
By Gay Nagle Myers
Spanish hotel firms dominated the
Caribbean construction scene in
2008, but the current economic
mess could retire more than a few
building cranes in 2009.
The flags of Sol Melia, Grupo Iberostar,
Occidental, Fiesta Hotel Group, Barcelo Enterprises,
Grupo Pinero and Riu Hotels fly atop hotels in Puerto
Rico, the Dominican Republic, Jamaica and as far south
Courtyard by Marriott unveiled a lobby redesign in April. The new design included check-in podiums, flexible seating and dining options, free WiFi and a 52-inch LCD touch screen with local information and maps.