“Accelerating declines” in U.S. hotel rates means bargains galore

by Christopher Elliott on February 26, 2009

If you love a hotel bargain, this ought to make your day. The average daily room rate dropped 5.2 percent in January, to about $100, according to the latest numbers from Smith Travel Research. Can you say “fire sale”?

Mark Lomanno, STR’s president, summed up the bleak picture for hotels:

The U.S. lodging industry results in January continued to reflect the deteriorating economic conditions throughout the country. In addition, the recent trend of accelerating declines in performance seen in the Top 25 U.S. markets highlights the difficulty hotels face when declines in both business and leisure travel occur in tandem.

But let’s look at the actual picture. It’s not pretty.

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Among the highlights:

• Tampa-St.Petersburg, Florida, reported an increase in average daily room rate, up 9.5 percent to $126. Thanks, Superbowl!

• Largest occupancy declines: Detroit, Michigan (-18.9 percent to 40.6 percent), Seattle, Washington (-17.9 percent to 45.7 percent), and Atlanta, Georgia (-16.8 percent to 48.4 percent).

• Largest average daily room rate declines: New York, New York (-13.1 percent to $199), Phoenix, Arizona (-12.3 percent to $133), and Detroit (-11.9 percent to $87.22).

• The biggest losers? Luxury hotels. As a group, they reported the largest decreases in performance measurements. The segment posted decreases of 17.1 percent in occupancy to 52.7 percent, and a 7.6 percent decline in average room rate.

Let’s put that into perspective.

In January, the average hotel charged about $100 a night but was less than half-full. What happened to the other 55 percent of the rooms? As my colleague Charlie Leocha points out today, a lot of them went to sites like Priceline.

To paraphrase the Negotiator: “Imagine. The. Deals.”

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  • http://travelingmamas.com Beth Blair

    Wow, look at those statistics – such a shame. It’s a vicious cycle. I sure hope bargain travelers getting in on the good deals.

  • jlawrence01

    All you need to do is to look at the Priceline and Hotwire bids accepted on Biddingfortravel.com or betterbidding.com and you’ll see that the rates accepted are MUCH lower than the same time last year (at the higher bidding levels). We are rapidly approaching the 2002-level deals.

    The last two trips that I have planned – to Seattle and Detroit – have been unbelievably cheap for 3 and 4* properties compared to two years ago..

    Over the past five years, hotel chains at all levels have added a lot of amenities thinking that they’ll be able to pass on the expenses to their customers in the form of higher rates. I have seen even “moderate chains” like Hampton and Courtyard at $150 in a number of markets. The question is how are they going to reign in all the costs that they have added in anticipation of even higher rates?

    By the way, folks, I know of several businesses who are moving to a per diem approach to travel. In the past, people would stay in a Marriott or a Hyatt and nothing was said. Now management is saying that you have $65-80 to spend on hotels and introducing them to Priceline and Hotwire.

  • Bill

    Hotels have lost $2400 in revenue from me this past 30 days for not having properly working internet connections.

    Instead of cutting rates and trying all of the marketing ploys, a good would would be “our internet works properly”.

    I have adopted a zero tolerance policy towards hotel intenet that does not work. If it doesn’t work, I take my business elsewhere. And yes, I am now staying in a hotel where the internet works – I cancelled 10 days in one where it was screwed up.

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