Reports from a number of well-respected companies that gather and analyze data for the hotel industry all seem to have come to the same conclusion: hotels all across the United States have been doing well in 2014 and they will do even better in 2015. There is unanimous consent in the most recent reports issued by Smith Travel Reports (STR), PricewaterhouseCoopers (PWC) and TravelClick’s North American Hospitality Review (NAHR) that RevPAR, Average Daily Rates and Occupancy, will all show improvement in 2015.
According to the latest statistics reported by STR and STR Global, all three of the key data-points that are used to assess hotel performance were up in year-over-year comparisons. The July of 2014 occupancy rate was 73.6%, an increase of 3.9% over the July of 2013 occupancy rate. The ADR in July of 2014 was $117.81, bettering the prior year’s ADR by 4.8%. RevPAR showed the biggest year-over-year gains, surging by 8.8% in July of 2014.
PricewaterhouseCoopers concluded in an August 2014 report that U.S. hotel occupancy rates will reach their highest levels in 20 years, during calendar year 2015.They noted that companies are increasing their travel spending budgets which leads to more group reservations. With the supply of hotel rooms remaining almost unchanged, added demand allows hotel managers the flexibility to raise rates without hurting occupancy rates. The PwC report predicts that continued strong group travel, as well as a strong summer travel season, will push hotel occupancy rates up about 2 percentage points, to 64.1% for the year ending December 31, 2014. For 2015, the momentum is expected to continue with occupancy rates rising to a 20-year high of 64.8%. PwC also predicts that RevPAR for 2014 will increase by 7.6% over 2013 RevPAR, and in 2015, RevPAR will be up 6.9% over the 2014 figure.
The August 2014 TravelClick North American Hospitality Review was quite optimistic about the immediate future prospects for the hotel industry. John Hach, Senior Vice President for Global Product Management at TravelClick said “While summer may be coming to an end, the hotel market has a hot outlook for the winter months.” Traditionally, summer is always a good time to be in the hotel business as the kids are home from school and families use the time to take vacations. In 2014, business travel has done surprisingly well and is expected to stay strong through 2015. Over the next 12 months (August 2014 through July 2015), committed occupancy is up 3.7% over the same 12-month period a year ago. Committed occupancy includes both group commitments and individual room reservations. The NAHP data also showed that in year-over-year comparisons, bookings for the transient leisure segment are up 4% and bookings for the transient business segment are up is up 5%.
The hotel industry is one of the most economically sensitive sectors of our economy. A strong hotel market is a solid indicator of the strength of the overall economy. When times are good, there is more economic activity and business executives travel for meetings, conferences and trade shows. When people have more money in their pockets, they go on vacations, book more hotel rooms, and inject money into the economy.
There are few industries that rely more on compiling and analyzing data than the hotel industry. RevPAR, occupancy, ADR and other metrics are used to measure a hotel’s performance. Once numbers and the latest economic data (GDP, unemployment rates, disposable income etc.) are analyzed, they can be used to guide managers to deploy the best pricing, marketing, and other strategies to maximize a hotel’s future revenues.
Running a successful hotel in an industry where profit margins have been historically thin is a challenge. It takes competent management to control costs while still offering the amenities and true value that attract paying guests.
Adapting to the New Way of Marketing Hotel Rooms
In previous generations, before the digital age, traditional travel agents, brochures and hotel travel guides were used by travelers to find and book hotel rooms. Most often, travelers chose their accommodations based on the brand and not on reviews posted on social media sites. Having a strong brand is still very important because it tells guests what to expect when they visit a branded hotel in any city around the country or around the world. The way people are booking their travels today however – researching hotels online, reading reviews and reserving rooms through their smartphones – is forcing hoteliers to step up their digital marketing strategies.
Hoteliers Now Have to Work Harder and Smarter
It is no longer enough to simply have a website for your hotel. Your website must be robust and allow visitors to interact with the site when they arrive. Since the depths of the recession five-rears ago, the hotel industry has bounced back and is now posting positive numbers. Broadly speaking, Revenue per Available Room (RevPAR), occupancy, and the average daily rate are all up from 2009. While the country was digging its way out of the recession, hotels have been steadily prospering. Currently however, many hotels are finding it difficult to continue to beat the previous year’s key numbers.
Margins are Being Squeezed by Online Travel Agencies
Customers love the transparency afforded them by the various online travel agencies, hotel booking sites, and array of ways they can find out more about hotels before they actually book a room. As evidenced by the enormous growth of companies like Priceline and Expedia, people want low prices and value when they search for accommodations. While great for customers, the competition is squeezing the profit margin for hotel operators.
- Google gets five percent of its total revenue from Priceline and Expedia and only financial services and retail generate more sales than the travel sector.
- TripAdvisor ($13.9 billion) and Airbnb ($10 billion) both have higher market values than industry stalwarts Hyatt Hotels ($9.55 billion) and the InterContinental Hotel Group ($9.97 billion).
- • In the first quarter of 2014, hotel brand sites accounted for 27.1 percent of all bookings while OTA sites booked 13.2 percent of all hotel rooms. At first sight, this sounds like good news for the major hotels, but looking more closely, the OTA share has grown by 9.2 percent from year-to-year as compared to a growth rate of only 6.1 percent for branded sites.
- Use of metasearch engines (search tools that aggregate information from several search engines at once) to decide on which hotel room to book is becoming more prevalent in the industry. In 2013, millennial travelers in the key 18-36 age group used search engines 39 percent of the time when booking hotel rooms.
The Savvy Hotelier
Industry analysts and experts in digital marketing almost unanimously agree that hotel owners and managers must incorporate enhanced websites, a strong social media strategy, as well as innovative apps that make booking rooms from a smartphone, or other digital device, a snap. Although it may be difficult for traditional operators to change from what has worked well in the past, in today’s hotel industry, hoteliers must either adapt to the current environment or watch the competition steadily pull ahead.
In light of this rebound, the owner communicated to HMG Hotels: “I sincerely wish we had more hotel assets to put under your control.” The numbers say it all: between August 2011 and June 2014 the net operating profits of Camino Inn and Suites were over three million dollars — $3,065,451 to be exact. Obviously projections for the future are bright: 2014 is expected to generate a year-end net operating income of about $2,200,000. Results like these may appear miraculous to most, especially to hotel owners worried about an under-performing asset, but to the team at HMG Hotels, turn around stories like this one are a regular part of doing business. It is always rewarding to get a thank you like this: “”I want to express my appreciation for the work and success your team has been able to achieve at the property; it has been truly a remarkable turnaround.”
Read more about our Miracle on El Camino Real HERE: http://www.prlog.org/12362678-the-miracle-on-el-camino-real-camino-inn-and-suites-in-mountain-view.html
Remember when we were 10 years old and our parents sent us to summer camp in the mountains. At first we may have objected to the notion of spending two weeks away from home. Once we arrived and saw the sparkling lake and got involved in camp activities, we had a great time. That youthful exuberance for experiencing new things does not always disappear as we age. Many adults still have that spirit of adventure and want to pursue culturally rewarding activities when they travel or go on vacation.
Recently, hotels have been paying closer attention to the growing number of guests who want to participate in creative tourism. The term “creative tourism” was coined back in 2000 by Crispin Raymond. Raymond defined the term as “Tourism which offers visitors the opportunity to develop their creative potential through active participation in courses and learning experiences which are characteristic of the holiday destination where they are undertaken.”
Crispin Raymond’s daughter was the inspiration for his book entitled “Creative Tourism.” While his daughter was traveling through Southeast Asia and Australia, she related stories of her experiences back to her parents. Among the activities she participated in was a week of learning and experiencing massage techniques in Thailand, a day spent learning vegetarian cooking in Bali, Indonesia, and taking a course in the Australian Outback that taught her how to become a “Jillaroo” (Cowgirl).
Around the world there are countless ways to take part in a creative tourism trip. Hoteliers regularly partner with local companies and skilled tradesmen to create unique and culturally enriching experiences for their guests. For example:
• In the French village of Biot, tourists can take a 5-day course in glass-making from a master craftsman. Each student learns the techniques and gets to make their own creation.
• In Guatemala tourists are offered weaving classes and learn how to dye fabrics in the vibrant colors favored by the native population.
• Hotel guests can take dance lessons in Brazil and then Samba the night away at a club in Rio.
Closely related to creative tourism is the implementation of destination experiences. Tourists are looking for more unique experiences than just dining at a fine restaurant or visiting an amusement park. They want to feel like they are part of a new culture by getting involved in local activities. Whether it is taking sailing lessons in San Diego or spending a day riding a mule along the South Rim of the Grand Canyon, active participation adds to the travel experience. A three hour ride on a mule in the Grand Canyon is an unforgettable experience.
Rewards Points Can Buy Memorable Cultural and Destination Experiences
Earning miles and rewards points through loyalty programs has been possible for decades, but only recently have the rewards focused on creating truly memorable travel experiences. Originally, airlines rewarded loyal customers with travel miles that could be converted to upgraded seating or complimentary plane tickets. Hotels exchanged free rooms and other perks for their customers who participated in their loyalty programs. Eventually, companies of all types started loyalty programs of their own (from the CVS card to your local grocery store, casinos and the NFL) and offered all types of merchandise. For many frequent travelers with large point balances, getting a new TV or set of golf clubs is no longer what they want. Loyal customers are looking for one-of-a-kind experiences for their loyalty points. Some colorful examples include:
• Diners Club points were used to send a 13 year old boy to a 5-day NASA space camp for his birthday.
• 500,000 Diners Club points were used by one couple to go on a 180 mile professionally-guided dogsled trek through the Alaskan wilderness.
• American Express allows its members to exchange points for cooking school in Tuscany and for backstage passes to concerts.
• Hilton Hotels offers a yoga retreat in Bali and helicopter tours over London.
• Marriott Rewards feature a hot-air balloon ride over wine country in the Napa Valley or a guided kayak tour down the Russian River in Northern California.
Culturally Diverse Neighborhoods
One does not have to travel overseas to get one’s share of exciting cultural experiences here in the United States. Almost every major city in America has ethnic sections or neighborhoods where it is possible to absorb different cultures and traditions. For instance, in San Francisco, it is easy to walk around Chinatown, shop, eat, and interact with someone who was born in Shanghai. In New York, a melting pot of dozens of nationalities, one can go from Little Italy to Chinatown in Manhattan and over to Brooklyn to interact with Russian immigrants and the Hasidic Jewish community. Head south to Miami and there is a vibrant little Haiti neighborhood that sells Jerk chicken. Along SW 8th Street in Little Havana, order a cup of Cuban coffee and ask the old-timers in Domino Park to demonstrate the finer points of this dot-matching tile game.
Dedicating Resources to Give Hotel Guests the Best Possible Experience
The hotel industry is proceeding along the same path as the most successful leaders in the cruise ship industry. Most cruise lines offer interesting daily excursions in the ports of call where they dock for a day or two. For instance, Holland Lines offers a cruise of the Western Caribbean, making stops in the Cayman Islands, Mexico and Guatemala. Passengers can schedule a combination bus and river tour through a banana plantation and watch the native population fish, canoe, and wash clothes along the river banks. The excursion also includes a beautiful fruit-filled luncheon under a thatched roof restaurant. Cruise lines charge extra and share in the profits of these local excursions. For hotels, facilitating cultural and destination excursions can help improve narrow profit margins.
While smaller hotels may not have the resources to hire a full-time employee to coordinate the various activities, they can still develop relationships within their local community by simply reaching out and making contact. When tourists have a memorable experience while staying at your hotel, they will tell their friends and probably come back for a future visit.
Hotels strive to please guests. To keep visitors coming back, hotel managers must continually offer the newest and cleanest options available. Because of this, hotels run the risk of being a strain on the environment. With so much laundry, daily cleaning supplies and regular small repairs, hotels consume a great deal of resources to maintain peak performance levels.
Fortunately more hotels are becoming aware of the advantages of being environmentally conscious. Many hotels have adopted more conservation techniques, including giving guests the option to not have their towels washed every day. While these changes may seem small, they can have a real impact on the environment over the longterm. Another excellent way to reduce waste is through hotel surplus organizations.
All hotels generate surplus as an inevitable part of their life cycle. Surplus is created when hotels upgrade their facilities, which generally happens every few years. Upgrades are often considered necessary in order to preserve customer appeal. Because guest rooms necessarily experience wear and tear, hotel furniture will often show signs of damage. If too much damage is visible, guests begin to notice. Guests do not want to pay for an unpleasant experience, and damaged, outdated furniture is disappointing for many.
It makes good business sense to upgrade furniture and decor regularly. When hotels bring in new furniture, something must be done with the furniture that is being replaced. Fortunately, thanks to environmentally conscious initiatives, there are a number of organizations available that can help deal with surplus and turn waste into earnings for everyone.
When considering these organizations, it is important to know that there are two major types of organizations available. First, there are for profit businesses that help place used hotel furniture. These surplus businesses operate all across the country, with some options that are regionally based. When considering a for profit company, it is important to look at where the business is located and how it handles the transfer of goods.
In many cases, hotels can liquidate their unwanted items quickly and interested third parties can find great deals on this furniture for their own personal or business use. This means that furniture and goods are being reused, which keeps them out of landfills. Businesses specializing in surplus will also provide some form of compensation to the hotel. Although the price will not come close to covering the cost of new furnishings, it can help offset the overall cost, which can be a great incentive to go green. There are many companies that offer this service, including Hotel Surplus, Hotel Liquidation and Alibaba.
Another alternative is working with a nonprofit organization. Some nonprofit organizations perform similar services, but with a minimum of funds exchanged. Instead of selling used items, nonprofit organizations can repurpose items and funnel them back into the community as needs arise. These donations can end up in schools, universities, charities and other places. While this does not provide as much economic gain to the hotel, it is a great way to give back to the community and ensure that nothing goes to waste. One example of an effective and creative nonprofit organization that works with hotels is San Diego based Sustainable Surplus Exchange.
Another way to minimize waste during periods of renovation is to work with existing furniture. In many cases, hotels may be able to successfully repurpose their own items and avoid buying new goods altogether. This approach is very environmentally friendly since it dramatically reduces the amount of waste generated overall. It is also cost effective since buying new is generally expensive. Many hotel owners are surprised by how good most items can look after being refurbished or repurposed. Property-wide reupholstery using eco-friendly fabrics can achieve wonders.
Hotels can choose an option that works best for their current inventory of furniture and their overall goals. Any of these options will help minimize the environmental impact of necessary upgrades. By maintaining zero waste as an objective and repurposing furniture, fixtures and equipment (known as FFEs in the hospitality industry), hotels can continue to provide top tier accommodations for their customers and simultaneously create a sustainable future.
It was good news for the hotel and hospitality industry when the results of the U.S. Department of Commerce’s 2013 Survey of International Air Travelers (SIAT) were released. The positive report showed that overseas visitor volume to states and cities in the U.S. increased over 2012 levels. Based on Department of Homeland Security records, 2013 international travel to the U.S. was up eight percent compared to the previous year.
The annual Survey of International Air Travelers has been conducted since 1983. Analysis of the raw data collected in the survey includes the purpose of the trip, international visitor count, and specific results by state and selected cities. For 2013, the general findings showed that visitation increased to some degree in every port of entry. The volume of overseas travelers also increased in most, but not all, destination cities. Compared to 2012, the average number of states and destinations visited declined while the average length of stay increased. More first-time travelers visited in 2013 and there was no significant change in the size of the travel party. Let’s take a closer look at the findings.
A record 21.4 million people arrived from overseas in 2013 to enjoy a vacation in the United States. That represents a seven percent increase over the number of leisure travelers in 2012. South America, Asia (except Japan), Europe, and Oceania were all regions that had gains in outbound tourists to the United States. Florida, California, and Hawaii all showed double-digit increases (over 2012) in the percentage of overseas visitors. Both Florida and California set state records for the most international tourists in a single year.
Visiting Friends and Relatives
This was the second most popular reason to visit the United States. In 2013, about 9.2 million people came to visit family and friends – a seven percent increase over the number who visited for the same reasons in 2012.
Doing business in America continues to be very important for foreign companies and businessmen. In 2013, roughly 4.9 million (up six percent from 2012) business travelers spent time in the United States. Large gains were experienced in New York, California, Texas, and Illinois, all of whom have aggressive policies to attract international business to their states. India stepped up its U.S. business travel by 28 percent and Japan showed a healthy year-over-year increase of 23 percent.
Up three percent from last year, the number of overseas visitors who attended conventions in 2013 hit the 3 million mark. Millions were attracted by the opportunity to learn about American businesses, technology, and pop culture. They attended the annual auto show in Detroit, the big Consumer Electronics Show in Las Vegas, and the wildly popular Comic-Con in San Diego.
Number of States Visited
Data revealed that more people, on average confined their travel to fewer states than was the case in the previous year. While some visitors may fly into Los Angeles and then take a side-trip to Las Vegas, NV or the Grand Canyon in Arizona, more people elected to stay within the state in which they arrived. The percentage of states visited declined from 1.5 percent to 1.4 percent in 2013. In addition, the percentage of travelers visiting only one state increased 1.7 percent to 72.2 percent in 2013.
Another finding from the survey was that the average number of destinations visited on a single trip declined from 2.0 in 2012 to 1.9 in 2013. More overseas visitors to visit just one destination, and while that was good for the most popular cities and destinations, it hurt some of the secondary travel destinations.
Length of Stay
The average number of days a typical overseas traveler stayed on a trip to the United States edged up slightly to 17.5 nights in 2013 – up from 17.0 nights in 2012. Even though the overall average daily stay was up, the average length of stay was down for visitors from the UK, Japan, China, South Korea, and China.
First Trip to the United States
The number of first-time overseas visitors to the U.S. in 2013 increased by roughly 10 percent to 7.6 million. Higher incomes, particularly among the younger generation, made it possible for more people to travel overseas. In addition, the US government made it easier to obtain travel visas and US tourism groups increased their marketing efforts overseas.
Top States Visited in 2013
New York held the honor for the most-visited state with approximately 9.8 million overseas visitors in 2013. That was a 5.0 percent increase over 2012. Florida came in second with 7.2 million (a record number for the state), and California was solidly in third with 6.5 million (up 8 percent from 2012).
Considering all of the overseas visitors, New York had a 30.6 percent market share, Florida achieved a mid-twenties market share, and California did well with a 20.2 percent market share. Other states that showed high growth rates in overseas visitor in 2013 included Louisiana, Texas, and Hawaii.
Top Destination Cities in 2013
• New York City
• Los Angeles
• San Francisco
• Las Vegas
Top 3 California Destination Cities in 2013
• Los Angeles – 3,781,000 (+ 11% from 2012)
• San Francisco – 3,044,000 (+ 9% from 2012)
• San Diego – 833,000 (+8% from 2012)
Encouraging more overseas visitors should be a national goal. Not only do visitors from around the globe inject money into our economy, but they also allow all of us who interact with them to see the habits and cultural differences that make our world so interesting. While the 2013 Survey of International Air Travelers offers some very valuable information about international tourism to the U.S., it does not include the large number of international tourists who arrive from Canada or Mexico. Hotels, major attractions, and restaurants all benefit when more overseas visitors are in town. Without the vibrant travel and tourism industry, our economy would struggle more than you could ever imagine.