Tag Archives: business travel

Recovering Economy Lifts Business Travel

A July 15, 2013 article in The New York Times says that travelers in the United States will spend about $273.3 billion on the road in 2013.  That’s a 4.3 percent increase over last year, and a reflection of stronger growth in domestic travel as the national economy stabilizes.

Of the estimated $273.3 billion, about $117.1 billion will be spent on group travel — meetings and conventions, conferences, incentive trips and the like. And $33.1 billion will be spent in the United States on international travel.  The information comes from a report that trade group Global Business Travel Association has released preceding its annual convention, which will be held early August in San Diego.

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U.S. Hotel Growth to Continue Despite Governmental Challenges

Adapted from an article by By Claudette Covey  Travel Pulse on 3/12/13

U.S. hotels will continue to achieve strong gains in both revenue and profits in 2013, according to the recently released March 2013 edition of PKF Hospitality Research’s (PKF-HR) Hotel Horizons. The hotel industry, in fact, will enjoy a 6.1 percent increase in revenue per available room (RevPAR) this year, along with a 10.2 percent boost on the bottom-line net operating income.

R. Mark Woodworth, president of PKF-HR, said, “Our forecast of a 1.8 percent increase in demand for 2013 is somewhat muted compared to the 3 percent increase recorded by Smith Travel Research (STR) in 2012.  However, when you combine the 1.8 percent growth in lodging demand with a projected increase in supply of just 0.8 percent, occupancy levels will rise to 62 percent. This will take the U.S. lodging industry past the long-run average occupancy level of 61.9 percent, a significant milestone.”

The projected RevPAR 2013 growth rate is more than double the long-run average of 2.9 percent.

PKF-HR is forecasting the average occupancy rate for U.S. hotels to increase by 1 percent in 2013, while average daily rate (ADR)is expected to rise by 5 percent. The $111.40 national ADR level projected for 2013 will be greater than the pre-recession peak of $107.42 achieved in 2008 in nominal terms.

Another benefit of rising room rates is the positive impact on hotel profits. After the 5 percent growth in ADR forecast for 2013, PKF-HR is projecting average room rates to grow at an even greater rate through 2016. “We are in the middle of a five-year period where industry fundamentals are extremely solid: supply growth will be below average for the foreseeable future, which will lead to revenue and profit growth well in excess of the norm,” Woodworth said.

After slowing down in 2013, the pace of revenue growth for U.S. hotels is expected to accelerate dramatically in 2014. PKF-HR is forecasting RevPAR for the U.S. lodging industry to increase by 8.4 percent in 2014, the greatest annual gain in RevPAR since 2005. The RevPAR growth will be the result of a combination of a 2.1 percent increase in occupancy and a 6.2 percent rise in ADR.

Looking beyond 2014, the optimistic outlook continues. New hotel development is expected to pick up and surpass 2 percent in 2015. However, based on Moody’s economic outlook, demand growth should continue at a level sufficient enough to maintain occupancy levels above 63 percent. PKF-HR expects that room rates will grow more than 5 percent annually through 2016.

… Adapted (mostly word for word) by Dave Hogg

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Springwood Team Honored by Multiple Hotel Brands

Three-quarters of all of Springwood Hospitality’s teams have recently been honored with some of the highest awards their brands can bestow!

Springwood’s Homewood Suites by Hilton® York was named Hilton’s #1 Most Improved Extended-Stay Property in the world for 2012 at the annual Homewood Suites by Hilton® annual conference, which was held this month in Orlando, FL.  This property took yet another first-place honor at the conference when Sales Director Melissa Leonard was honored with the Director of Sales of the Year award for the entire Homewood Suites by Hilton® chain.

Springwood’s Homewood Suites by Hilton® York team was also recognized at the conference with the Connie Award (named for founder Conrad Hilton), for ranking in the top ten per cent of all Homewood Suites by Hilton® properties worldwide on a variety of performance measurements.

The staff at Springwood’s Country Inn & Suites, Hershey at the Park was recognized with the President’s Award at the Carlson-Rezidor annual conference in Miami earlier this month. This the highest honor awarded by Carlson-Rezidor Hotels among all of its hotel brands.  The award represents overall performance, on a variety of performance measurements, in the top 10% of all Carlson-Rezidor hotels worldwide.  The Carlson-Rezidor family of brands includes Country Inns & Suites and Radisson, among others.  This year marks the second year in a row that this property has been honored with the Carlson-Rezidor President’s Award at the conference.

The staff at Springwood’s Comfort Inn & Suites, York has earned Choice Hotels’ Gold Award for achieving overall performance in the top 10% of all Comfort Inn and Comfort Suites properties worldwide.  This award will be presented at the upcoming Choice Hotels annual conference.  This marks the second year in a row that the team has earned Choice Hotels’ Gold Award for its performance.

The only Springwood hotel not to take home top honors this year will be the Holiday Inn Express & Suites, York, because that hotel was undergoing a $2 million renovation/upgrade in the fourth quarter of 2012.  The construction took the property out of the running for the brand’s top awards.  The renovations and upgrades will be complete with construction of the new pool in April.

Springwood Hospitality is an entrepreneurial, hotel development and management company where the “Caring, Competent, Committed” company culture helps it achieve a high level of success.   Springwood will open its new Fairfield Inn & Suites by Marriott®, Hershey Chocolate Avenue on April 4th.  It will also soon begin construction on a new Hampton Inn & Suites on Queen Street @ I-83 in York, PA; and it is working on the development of a new luxury, extended-stay hotel on Buckeystown Pike in Frederick, MD.  Both of those hotels are expected to open for guests in 2014.

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U.S. hotel revenue gains expected in 2013

Reprinted from an article by Danny King today in Travel Weekly:

Steady growth in U.S. hotel demand won’t be tapering off soon, according to reports released Monday by PricewaterhouseCoopers (PwC) and Smith Travel Research (STR).

Growth will keep a steady pace through next year predominantly on room-rate increases, according to PWC.

Revenue per available room for 2013 will rise 5.6% in 2013 on a 4.8% increase in room rates, PwC said. Occupancy will hit 61.7%, which would mark four straight years of occupancy increases from a 54.6% rate in 2009.

As for 2012, PwC maintained its forecast for 6.5% RevPAR growth. U.S. RevPAR increased 8.2% last year.

Such forecasts were echoed, albeit cautiously, by hotel leaders speaking at the New York University International Hospitality Industry Investment Conference in New York on Monday morning.

“Performance still looks really good, but we’re worried about Europe, and we’re increasingly worried about domestic politics,” said Marriott International CEO Arne Sorenson on a conference panel. “Let’s hope that, like last year, business continues to perform strong.”

Dave Hogg – “Good news!”

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Maximizing House Profit using Flex/Flow Calculations Part 5: Final Considerations.

This is the last post in the series and I wanted to discuss some items that should be considered when reviewing flex/flow numbers.  Each period is unique and should be evaluated that way.  It is impossible to discuss all of the different issues that can skew flex/flow numbers from month to month, but I am going to discuss a couple situations below that will be helpful in analyzing flex/flow calculations. 

How did we get the extra revenues?

This is one of the most critical situations to consider when reviewing flex/flow numbers.  As discussed in part one, there are a lot of expenses that are budgeted and measured based on per occupied room (POR).  However, flex/flow measures the dollars from the revenue variance to the house profit variance.  So what would happen if the property exceeded revenues for the month but sold fewer rooms than budgeted?  Well if you consider that your POR costs should have been lower due to fewer rooms sold, the additional revenue had to come from either ADR or another revenue department, so your flow through percentage should actually be higher than your goal.  The opposite is also true if you exceeded revenues by selling more rooms than budgeted while the ADR was less.  The rooms sold will cause the POR costs to increase but the lack of ADR will hurt the flow through percentage because you got less revenue per room sold.  The same should be considered when you fall short of revenues as well.  There are numerous scenarios on this, but the point is that you should consider how you got the revenue variance to determine if the goal should have made and if the goal should have been higher.

Approach the small variances with caution.

This was purposely shown in example #2 for parts 3 and 4 of this series.  You will see that the smaller the revenue variances, the more likely you are to get an outrageous number in the flex/flow calculation.   If I told you that your property just flowed -500% for the month and nothing else; what would your reaction be?  I am guessing it wouldn’t be “great job and keep up the good work” but should it be?  What if upon further review of the statement you found that the revenues were over $200 and every other line item equaled budget, but you had a $1,000 extraordinary expense and that alone caused the house profit to be under $1,000 and the flow through to be -500%.  I think you would agree that this is not as bad as the initial -500% flow number would lead you to believe.  In my experience working with flex flow numbers, my general rule is the smaller the revenue variance the less effective the calculation.  Therefore it should not be taken literally without some further investigation.

In closing, I hope this series gave you another tool to manage your property.  As stated in part #1, the goal with flex/flow calculations is to measure the efficiency between additional revenues and bottom line profit.  Thanks for reading the series and stay tuned for posts in the future that will range widely on operational hotel topics.  If I can assist in any way, feel free to contact me directly at jshelton@springwood.net

Hospitably Yours,

Justin

Flex/Flow Calculations Poll #1

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Flex/Flow Calculations Poll #2


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Is your hotel too hip for you?

The hallway of the W Atlanta Downtown illustrates the writer's comments.

By Jayne Clark, USA TODAY (Edited down to “blog length” – with apologies – by Dave Hogg)

Some of the hallmarks of cutting-edge urban hotel design — lobbies that double as party lounges, low-slung seating that (for those of a certain age) make getting up gracefully a challenge, complicated in-room control panels that bewilder, oddly placed fixtures (think bathtub in the middle of the guestroom) and lighting so dim it’s hard to see what’s where — are signs that your hotel might be too hip for you.

Joan Eisenstodt, a Washington hospitality industry consultant, recalls having to fumble for a flashlight as she made her way to her room in the W hotel in San Diego. “Ws are fabulous and funny. But they’re clearly not designed for anyone over the age of 35,” says Eisenstodt, 63. “The halls are too dark. They’re not even safe.”

“There are people who skew older but are young at heart and want to hang out in a more youthful environment,” says Chip Conley, 50, executive chairman of Joie de Vivre Hotels. “If the type is too small on the menu, they’ll just put on their glasses and deal with it.” The 35 boutique hotels in the Joie de Vivre catalog were created by using magazines (Real Simple meets Dwell) or movies stars (Gwyneth Paltrow meets Harrison Ford) as guiding principles in their design. The idea is to appeal to guests’ lifestyles.

Boutique hoteliers like Conley may have pioneered this approach, but in recent years the major chains have followed with their own “lifestyle” brands that convey the message: You are where you stay. (Among the new-ish lines: Hyatt’s Andaz; InterContinental’s Indigo; Starwood’s W and Aloft; and Marriott’s Edition.)

But can a hotel be too hip? Yes, says Conley, if it isn’t mindful of its target audience. Hotel consultant Daniel Edward Craig says some hoteliers have gotten so immersed in cutting-edge design, they’ve neglected service. “If the service and staff are warm, they can overcome the initial intimidation you feel when you walk into a foreign environment. The problem is that some hotels have put so much money into design and hired the wrong staff,” he says.

Craig, the former general manager of Vancouver’s trendy Opus Hotel (which created buzz when it opened in 2002 with its glass wall that separates the men’s and women’s restrooms) believes a hotel can do one of two things: “It can make you feel a bit cooler for being there, or it can make you feel not cool enough.”

Greg Myers, 42, was firmly in the latter camp when he checked into the W Chicago last year. “I felt like a senior citizen at a senior prom,” says the York, Pa.(!), sales director. “It was dark. The music was loud. It was the worst experience.”

Adam Goldberg, 43, encountered a similar scenario upon arriving at New York’s Hudson (whose website touts it as the Ultimate Lifestyle Hotel for the 21st Century). “It was like checking into a nightclub,” says the Fairfax, Va., digital TV consultant. “Dance music, dim lights, dark surfaces.”

Other frequently travelers are confounded by the tech-tronics of cutting-edge hotels. Tracy Kulik, 55, spent a fitful night at the James Hotel (now the Hotel Theodore) in Scottsdale, Ariz., when she couldn’t figure out how to turn off the LED illumination on the headboard and bed base. And she found the shower in her room at Washington’s Donovan House hotel so peculiar (it protruded into the bedroom and glowed), she snapped a photo with her cellphone.

Even Steve Carvell, associate dean of the Cornell Hotel School, admits to occasionally being confounded by how things work in some lifestyle hotels. But just as you might trade in your sports car for a van when you have kids, you might have to change hotels as you get older. “The brand doesn’t have to shift. It’s a question of whether you (now) belong in that demographic,” says Carvell, 54. “That’s why (hotel chains) create a family of hotels. They’re looking at you as a lifetime customer.”

Eisenstodt, who spends about 180 days a year on the road, has a different take. “I think hotel designers are going a little crazy in trying to be hip. There are (Baby) Boomers who may want to stay in a cool hotel. But they want light they can read by and furniture they don’t have to struggle to get up from,” she says. “When you’re 60-something and not totally cool and you’re not made to feel welcome, you wonder, ‘Isn’t the hospitality industry supposed to make you feel welcome?’ ”

COMMENTARY:  My family will be staying at the leading-edge-style Curtis Hotel in Denver this summer.  I’ll report back to you how the middle-aged parents – vs. the two teenagers who will be with us – view the atmosphere. I agree with consultant Eisenstodt that hotels’ pursuit of an ever narrower target market can repel some of the fat part of their market. (Double entendre intentional)  Time will tell if these moves are wise.  I have my doubts about them except in the largest U.S. markets.

It’s also cool that Jayne Clark shares an interview with a traveler from our home base of York, PA.  Trust me, we don’t often see that!

Dave Hogg

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Reality Check: US Hotel Room Prices Repairing

In a Feb 16, 2011 article in MarketNews.com, Claudia Hirsch chimes in on what all of us are seeing.  The following are some quotes from her article.

“After discounting prices throughout the recession, U.S. hotels have begun gently repairing room rates as occupancy levels increase, but full price restoration is still far off, according to hotel executives, travel agents and meeting planners.  Lodging prices began edging higher in 2010.  Stronger leisure and business occupancy has prompted the turnaround in room prices, and early 2011 signs point to guest counts trending upward throughout the year.”

(We’re also seeing a strong return of the vaunted Business Traveler in the central PA markets that we serve.  It’s been helping us to register some strong revenues.  In October through December 2010 our Holiday Inn Express & Suites actually logged its best 4th quarter revenue ever.   It’s been open for 17 years.  There are other competitive factors at work in that local market, but it’s an indication of the resiliency of the industry.)

“Still, a return to pre-recession room prices is likely a year or more away for many hotels… At a three-star hotel off New York City’s Times Square, room prices have nudged 6% to 7% higher year-to-date vs. last, despite a growing glut of inventory in the metropolis.  ‘Our occupancy is up, and the consumer is more confident. We can see it and feel it. But at the same time, they want value,’  said John Canavan, general manager at the Hotel Edison.”

Springwood has seen the same trend.  Our rates are up across the board, and occupancies are improving, but we have yet to see pre-recession ADR’s.  It could be a couple more years until prices fully recover.

by Dave Hogg

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