Hotels Scramble to Increase Hotel Revenue as the Economy Sinks

According to the USA Today, the economic downturn is forcing a lot of Americans to cut back on their travel expenses. Yes, they are giving up their family vacation. The USA Today/Gallup Poll found out that 58% of those who regularly take an annual vacation will lower their leisure spending or not go at all. Though not surprising, the severity of the drop poses a major challenge to the hospitality industry as a whole.

It is estimated that Americans will spend $30 billion less this spring and summer. The whole industry is gearing up for the turmoil. For example, the airlines have set 8.5% fewer seats for spring break in April for both domestic and international flights. For June, the seats will be fewer by 8.4% as well. But all is not lost, many companies are thinking of great ways to cope. Destinations such as Walk Disney World Resorts will be promoting packages such as three nights free with theme park pass and four-night/four-day tours to improve hotel booking performance.

Meanwhile, lodging occupancy and revenue per available room (RevPAR) experienced double-digit drop in January compared to last year. It is estimate that occupancy rates fell to 45.9% from 51.5 the previous year. It is down by 10.7%. Hard figures show that RevPAR is now $46.24, down to 15.3%. In addition, the average daily rate is down to $100.66 as well or by 5.2%. It is important to use yield management at this point.

Mark Lomanno, Smith Travel Research president, notes that these figures “reflect the deteriorating economic conditions throughout the country”. Aside from this, the accelerating performance downtrend in the top United States market emphasizes the difficulty that hotels inevitably need to face when both business and leisure travelers cut back simultaneously.

Among top markets in the US, New York experienced the most dismal figure; it is down 13.1% on its average daily rate. RevPAR has its biggest drop in Detroit at 28.6% followed by New York at 13.1%. In terms of RevPAR performance, only Washington D.C. is the exception. Its RevPAR was mainly boosted by the presidential inaugural this January.

At times like these, it is important to use all valuable tools available. RevPAR Guru sets itself apart by providing information about force of market, number of unique prices, hotel rates classified by star ratings and guests reviews every single day of the year. All data are placed into a database which continually reassesses dynamic changes providing hotel revenue managers with maximum RevPAR and profitability.