The hotel industry has enjoyed a “sellers” market in recent years, but it doesn’t take a sous chef to figure that those days are numbered as lodging demand heads south along with the economy.
The market began to tank as early as the second quarter of this year but the credit market collapse coupled with the aforementioned economic downturn forced market analysts to downgrade their already gloomy forecast.
Since these two forces, supply and demand, are now moving in opposite directions the hotel industry can no longer maintain an aggressive policy as it relates to bumping up room rates.
Now the balance of power will begin to shift from a “sellers” market to a “buyers” market meeting planners will face a different proposition from hoteliers as witnessed in the past…value add.
Instead of slashing rates and giving away the proverbial house, hoteliers will provide more value by offering meeting planners some of the following incentives:
- Free breakfast
- Complimentary Internet access
- Free parking
- Waived resort fees
- Extended pre and post rates
- Enhanced meeting rewards program
- Longer cut-off dates
- Waived early departure fees
- Lower comp ratios
- More upgrades
- No meeting room rentals
- Lower F&B minimums
- Higher attrition percentages
So planners don’t expect this trend to last much past the second quarter of 2010. The lack of new builds will cause inventory to remain about the same as 2009 and will eventually result in the rise in occupancy and ADR’s.
The planner who can strike a three-year deal with one hotel brand could have his carrot cake and eat it too!
