Savvy hoteliers adapt to outside influences

• In response to price-conscious consumers, consider value-adds when pricing.
• To capitalize on an evolving business mix, harness data points.
• Place an increased effort on impacting the guest with multiple touch points to avoid decreasing customer-satisfaction scores.

Paul Whetsell, CEO of Loews Hotels (far right), said hoteliers today are “in a good place" as ARC's Charles Thackston and J.D. Power's Stuart Greif look on.

NASHVILLE, Tennessee—While much of the discussion at the fourth annual Hotel Data Conference centered around macroeconomic trends outside of hoteliers’ control, Thursday’s educational sessions kicked off with a focus on adapting to those outside influences and strategizing operations accordingly.

Panelists provided important takeaways for the hotel industry in the current climate, including:

• In response to price-conscious consumers, consider value-adds when pricing.
• To capitalize on an evolving business mix, harness data points.
• Place an increased effort on impacting the guest with multiple touch points to avoid decreasing customer-satisfaction scores.
• Monitor the economic climate closely to prepare appropriately for any upcoming headwinds.

Paul Whetsell, CEO of Loews Hotels, set the tone for the second day of the conference, saying hoteliers today are “in a good place.”

“I’ve seen these cycles typically last seven or eight years, and we’re halfway through a recovery cycle. At the end of a seven- or eight-year cycle something happens, like a 9/11 or Lehman (Brothers) breakdown or we bring it on ourselves with over-building. We’re right in the middle of that cycle,” Whetsell said.

“When we get halfway through the cycle, I start to look for what could go wrong—political uncertainty or the situation in Europe,” he continued. “For the most part, the fundamentals look good but there are some headwinds out there. On the positive side, I don’t see a lot of building.”

Whetsell spoke to the importance of collecting and analyzing hotel performance data, saying it helps him set the direction of Loews’ 18 hotels in U.S. and Canada. He cited a recent example in Orlando, Florida, where the hotel adjusted business mix according to performance trends.

At the Loews Royal Pacific Resort, management reduced the amount of group business the hotel was bringing in from 40% to 25% because the hotel was getting transient customers willing to pay an $80 to $100 higher rate. Later, data from STR, parent company of HotelNewsNow.com, showed a leisure demand dropoff in the market, and Whetsell directed the team to reconsider its group/leisure strategy.

Overall U.S. trends
Tim Hart, executive VP of research and development of enterprise services for TravelClick, presented forward-looking statistics that showed transient roomnight demand is up 7% compared to last year and transient average daily rate is up 6%. Group roomnights, he said, are up 4.6% and 1.8% in ADR.

Overall, committed business on the books is up nearly 5% when compared to the same timeframe a year ago, according to TravelClick data. Hart said TravelClick is seeing a slight dip in the growth pace of group ADR. Recent group booking velocity is running behind last year, he said, which is an early warning signal of upcoming friction.

Scott Moyer, manager of lodging, air and rail relations at AAA, said Americans are continuing to travel despite economic uncertainty and tightened financial budgets.

“Americans remain committed to travel, and we believe after the election travel demand will continue to rise,” he said.

However, Moyer said gas prices could have a detrimental effect. He said AAA considers $4 a “magic number,” meaning American travelers will begin to make changes to their travel plans once gas prices reach that point. There are four states with average gas prices more than $4, and Moyer said those states are experiencing less-than-average travel demand.
 
Whetsell agreed $4 is the number that “creates some heartburn,” but said he is more concerned about the cost of air fuel.

Customer satisfaction
During times of high demand, guest satisfaction often struggles because trimmed staffs are too busy processing check-ins and can’t go the extra step to personalize a guest experience. The current landscape is no different, said Stuart Greif, VP and GM of the global travel and hospitality practice at J.D. Power and Associates.

However, Greif said high guest satisfaction translates to revenue, and hoteliers can increase guest satisfaction with little spending.

“How much does a warm smile cost?” he said.

Happy customers are three times more likely to rebook, Greif said. Positive interaction with guests leads to positive feedback. Noise and Internet costs are the two factors that drive the most negative complaints..
Whetsell said the price/value proposition is a balance that needs to be reached at all times.

“You folks involved with revenue management are hearing, ‘Drive the rate, you gotta get more rate,’” he said. “When we try to do that, we take the risk that that price-value proposition gets a little out of whack.”