I just returned from a 12-night road trip to speak at some national and regional conventions, and I thought I’d share some of the sentiments I encountered while living “up in the air.”
Viva Las Vegas
I started in Las Vegas at the Virtuoso Travel Mart. Virtuoso is a collection of high-end travel advisors (never call them travel agents), and they rent out the Bellagio each year to conduct their own version of “speed dating” with luxury hotel sales people. Travel Mart 2012 was the best attended ever, with more than 1,700 advisors and more than 1,600 sales professionals attending. For four days straight, the advisors sat down one-on-one with the sales people, taking over all of the cavernous Bellagio ballrooms as large clocks counted down a few precious minutes. Then a voice would ask the sales folks to change seats, and one half of the attendees got up, moved to the left and sat back down. Poetry in motion. Most attendees were Travel Mart veterans with long-standing relationships, so the sales pitch often included pictures of kids and grandkids.
From talking to some of the people present, and by judging from our data, the luxury hotel industry is alive and well, thank you very much for asking. Room demand is up, supply growth is very muted, and rate growth is the name of the game. This is not only true for the U.S. but also for the European and especially the Asia/Pacific markets.
The cocktail parties organized by the global hotel luxury chains were well-attended, and I saw smiles galore. Bellagio provided its usual 5-star/5-diamond service and amenities (such as a baseball-size globe made of chocolate with a little chocolate airplane on top—yum). One of the highlights of Travel Mart is certainly the walk up to the opening reception, when 500 or so associates line the hall for a 30-minute standing ovation to welcome back attendees.
Throughout the week, when overhearing some of the advisors tell tales “out of school” about the trips they organize for their high-net-worth clients, it was clear the global stock market gyrations have had little to no impact on the high-end leisure traveler. Exclusivity counts, and their clients are certainly able and willing to pay for memorable events or hotels or experiences. Recession? What recession?
Denver calling
From Vegas I headed to the Global Business Travel Association annual convention in Denver. GBTA saw 5,000-plus attendees over five days take over downtown Denver and the spectacular convention center with guest speakers as diverse as Henry Paulson (ex-Secretary of Treasury), Meg Whitman (ex-eBay chief) and Sean Penn (Haiti Relief organizer). (Quick “Thank You” to Mark and the staff of the Hotel Teatro, which provided their usual excellent service and a location that is hard to beat.)
The idea of the GBTA’s annual convention is to get travel buyers and suppliers into one room (well, one city, anyway). The showroom floor is certainly impressive, with car services showing off sedans, airlines presenting their actual first-class seats and hotel companies offering the latest and greatest in room design. Monday’s hotel data breakout session that Julie Parodi from Pegasus and I conducted was totally oversubscribed—a 300-plus strong standing-room-only crowd prevented some from actually getting into the room. (Sorry if you did not make it. Hopefully next year the room will be bigger.)
The tenor of the takeaways from talking to hotel suppliers on the floor was easy to distill: strong first half of 2011, some clouds/question marks regarding the rest of 2011 and very strong bookings for 2012. That plays into what I heard from some of the travel buyers who shared their insights (some of them are booking north of US$1 billion in air and hotel per year). Their message seemed to be uniform as well: While they may not necessarily be hiring, the folks that are working for them are on the road more, they are booking groups and 2012 is going to be a strong demand year. At the same time, they relayed the sentiment that hoteliers do not seem to really trust the data and that upward rate pressures are not as fierce as some buyers had feared. It will be interesting to check in with both sides later this fall to hear how the negotiations for 2012 and 2013 went.
Later on I was fortunate enough to join the CEOs of Expedia, Frontier Airlines and Travelport for a panel discussion on the “Travel Value Chain.” A senior hotel executive had to cancel at the last minute, and I was at the right place (read: Denver) at the right time (read: Tuesday morning). “Luck favors the prepared,” so I stepped in front of 2,200 travel buyers and suppliers to give our point of view on the state of the hotel industry. The moderator, Trip Davis from the Darden School Foundation, asked about the “buyer’s market” of the last few years, and I could only reply that I hope the buyers enjoyed it while it lasted.
Hoteliers obviously liked that comment, and I did not mean to be flip, but with year-to-date occupancies of more than 70% for the three high-end chain scales (luxury, upper upscale and upscale), it seems to me the days of extremely short group booking windows (read: in the quarter for the quarter) may not be as prevalent in 2012. A logical outcome of low supply numbers is that the new demand is absorbed by existing hotels, increasing their occupancies and pricing power. And with that compression, group meeting planners that have historically relied on their pick of the “hotel litter” when it came to availability may be forced to look further out for dates and rates, which in turn will benefit the industry as a whole. So, my takeaway for travel buyers at the end of the panel was: “Book early! Book often!”
Walking in Memphis
From Denver, I headed to Memphis for the Southern Lodging Summit. Chuck Pinkowski has been our gracious host over the years, and he organized the usual top-level lineup of speakers. Special thanks to Doug Browne from the grand dame Peabody Hotel for their gracious service (and the duck-shaped soap). It is always insightful to hear the American Hotel & Lodging Association’s Marlene Colucci and her take on what is going on in Washington, D.C., and Peter Yesawich’s update on the leisure traveler sentiment in 2011.
As I presented some Memphis-specific numbers I was reminded that we are ultimately in a street-corner business, and with all the industry numbers in our arsenal, our forecast and performance data are really just high-level averages. I think this was apparent in the lively question session throughout my talk.
Back in Nashville
So, I am back in Nashville for a few short nights before I head out on the road for more presentations, discussions and cocktail receptions. Please say hi when you see me in an airport somewhere. I am curious to hear what your thoughts are as we get into the last part of 2011 and into 2012.
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