Tag Archives: travel

Higher Prices Aren’t Scaring Away Summer Travelers

By: Kate Rogers Published May 08, 2014 FOXBusiness

Americans are welcoming summer vacation this year with open arms after a rough winter, but their gateway is going to cost more than in the past.

New data from travel site Orbitz finds 88% of Americans plan to take a summer vacation this year, up 11% year-over-year. Marita Hudson Thomas, Orbitz public relations director, says the numbers reinforce signs of a recovering economy.

“We had a horrible winter—one of the worst in history. People want to get to summer and the heat and warmth- they are running from the terrible winter.”

Summer travel costs are up this year, according to Orbitz, with airfare up 6% and hotel prices up by 12% across the reports’ top destinations.

But travelers say they are willing to spend more this year to vacation, with 51% saying they’d shell out $2,000 or more for their vacation this summer, versus 44% last year.

Travelers on a budget plan to use their travel rewards to pay for hotels and airfare and are willing to buy food and eat in their hotel rooms to save some cash.

More Americans are traveling to cities this year, Orbitz finds, and while hotel prices are up, travelers can find rooms for under $200 in half of the top 10 destinations. Most travelers plan to hit the road in June and July (71%).

This year, Cancun edged out Orlando as the top destination, which has consistently been in the top spot, Hudson Thomas says.

“It’s still a great family destination with Disneyworld” she says of Orlando. “Cancun is our only international destination this year.

The biggest crowds can be found on the Friday before Memorial Day and the biggest travel day will be Thursday, July 3, the report says.

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Americans Plan to Spend More on Travel This Summer

(Edited down from a May 21, 2012 story By Kate Rice)

Americans plan to spend more on travel this summer than last year, according to a recent Orbitz survey.  More than half plan to spend over $1,500 on the trip, while only 39% said that in the 2011 survey.  77% plan on taking a vacation this summer.   56% plan to drive even though 60% said gas prices would impact their travel planning.

July is the hot travel month, with 31 percent saying they plan to travel during the month.  Orbitz said that New York City moved up from the sixth most popular destination in 2011 to the number two spot this year.

Nearly half of survey respondents are getting summer travel ideas through social media platforms such as Facebook and Pinterest.  Most American consumers plan to travel domestically (81%), and 19% are planning to travel internationally this year.

Dave Hogg

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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,


Flex/Flow Calculations Poll #1

Flex/Flow Calculations Poll #2


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Maximizing House Profit using Flex/Flow Calculations Part 2: How much should “Flow” to the bottom line?

The answer to this question can be as simple or complicated as you wish to make it, but you will want to set a goal you find acceptable based on the parameters discussed in this post.  Please keep in mind that I am speaking in generalities and there are certainly a number of ways to get a final answer. 

Where do I start? 

Start with a full year financial statement in hand and you will want to identify every line item to determine if it is a variable or fixed cost.  The fixed costs would be the items that do not fluctuate based on the number of rooms sold for a given period.  Some examples of these costs would be associates that are on salary, cable or satellite service, billboard advertising, and other items of that nature. When going through this process you are going to have to make some decisions. For example, maintenance expenses; some of these can be either fixed or variable.  My belief is that each room and piece of equipment should be kept on a set preventative maintenance schedule regardless of occupancy, which results in accounting for most of the maintenance expenses, including most wages, as fixed expenses.  The other train of thought is that if your occupancy is down you can cut your maintenance expenses because your rooms and equipment isn’t getting as much use so it will not need it.  In this case, some of those expenses would be considered variable.  This is but one example you will need to consider when going through this process.  How you account for these items is completely up to you and how your properties are run. 

I have determined what is fixed and variable, now what?

Now it is time to set goals.  Add all of your fixed line items and divide them by your total expenses to get the percentage of fixed expenses.  That would be your percentage of fixed costs and in turn should also be very close to your flow through goal.  The reason this works is because all of these items are (hopefully) already budgeted and therefore any additional revenue will have no bearing on these line items.  That means the additional revenue will only be affected by the variable expenses and the fixed percentage should “flow” directly through the financial statement to the bottom line.  If you subtract that number from 100%, it will obviously give you the variable expenses and it should be very close to your flex goal.  The theory here is that when you fall short of budgeted revenues you still have the fixed costs, but shouldn’t have the variable expenses.  The property should save or “flex” the variable expenses and that savings should be reflected in the house profit variance.  To be fair, the flex and flow goals should equal 100% when added together.   I have heard flow through goals anywhere from 50% to 80% and it really is dependant on how much of the expenses are variable.  You are basically putting a percentage on your fixed costs (flow goal) and your variable (flex goal) costs.  At Springwood Hospitality our goals for flow is 70% and our flex goal is 30%.  Basically we are saying our fixed costs are 70% and variable costs are 30%.  You may find that you are more comfortable with a lower flow number and a higher flex number or vise versa.  It is really your call. 

Don’t go throwing those numbers around just yet; in Part 3, I will discuss how to calculate flow to improve performance.          

Hospitably Yours,


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U. S. Business Travel to Grow 5% in 2011

According to a recent study conducted by the National Business Travel Association and reported by Bloomberg, business travel spending should grow 5% in 2011.  They credit both a growing economy and stronger corporate profits.

Business travel in 2010 grew 2.3% in 2010 according to NBTA estimates.  We saw this impact anecdotally in our hotels that cater to business travelers, who started showing up again in stronger numbers in 2010.  This factor helped fuel the nearly 16% revenue increase in 2010 at our Homewood Suites by Hilton (a great brand, by the way).

NTBA points out that international business travel rose a whopping 16.9% in 2010, fueled by export-driven commerce.  That’s a huge gain, and it is an actual benefit of the weaker dollar.  Let’s hope that the federal government someday sees the wisdom of promoting this valuable export as a way to grow the economy and ease our trade deficit.

I predict that NTBA is right about the coming 2011 increase in business travel.  As its spokesman said in the article, “Companies are once again recognizing the value of face-to-face meetings … to build relationships.”

At Springwood, we build our business on relationships, because we believe that relationships drive not just our business, but all business.  There is no better way to build them than face-to-face!

Dave Hogg

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