Perks and packages
- March 27, 2009
Even with gas in the $2-a-gallon range, people are skittish about this year’s vacation. Should they go ahead and escape the stress of the recession or sock that money away into a rainy day fund in case things get worse?
Corporate travel, the bread and butter of the lodging industry, is equally uncertain. The Association of Corporate Travel Executives says that most companies are cutting back 10 to 20 percent on business travel, which was already down 7 percent in 2008.
But don’t toss the travel guide yet. The lodging industry is working hard to recapture old clients and find new ones. Just as airlines are considering a return to free beverages, room upgrades and extra perks are becoming de rigeur. Plus, hotels are pushing promotions that take advantage of most any opportunity that pops up.
To plump reservations during this month’s 2009 Men’s NCAA Frozen Four College Ice Hockey Championship in Washington, D.C, the Crowne Plaza National Airport hotel in Crystal City wooed fans with a package that included complimentary breakfast and all-day metro passes. The Westin Reston Heights also is running a promotion this month (through April 12) that plays on Washington’s annual Cherry Blossom Festival. For $139 a night, Thursday through Sunday, families can stay in a suite with a host of freebies. Westin is throwing in a movie, breakfast for two adults (with children under 12 also eating free) and a box of chocolate-covered cherries.
Some properties have added meeting space, hoping to lure associations and corporations for conferences and retreats. Others are hiring meeting planners, rearranging sales teams and loosening up on contractual obligations, such as minimum stays.
“I’m hearing the same story from all my industry colleagues,” says Louis W. Nicholls, director of sales and marketing for the Westfields Marriott Washington Dulles hotel in Chantilly. “You look for opportunities in places that maybe you wouldn’t have looked before.” Westfields Marriott recently teamed with an area radio station that features Christian programming, promoting church retreats, couples retreats and fellowship weekends.
Inauguration boost short-lived
But it’s going to take more than ingenuity to fill hotel beds. A bump from President Barack Obama’s January inauguration got hotels in Northern Virginia and Washington off to a strong start in January. The event brought in more than $98 million between Jan. 17 and 20, according to Smith Travel Research. Hotels in the District charged an average of $600 per night, with Virginia prices slightly lower. Several hotels were completely sold out.
Despite that auspicious start, the overall short-term forecast is grim. The 2009 national average occupancy rate is expected to drop to 57.2 percent; down from last year’s 60.5 percent, according to Robert Mandelbaum, director of research information services for PKF Consulting in Atlanta. In fact, PKF published a study predicting 2009 will go down as one of the worst years on record for the hotel industry because of rising defaults, bankruptcies and foreclosures on properties.
Industry sources say that the down market presents even greater challenges than the months after 9/11. “Demand is way below supply,” says Jack Berry, president of the Richmond Metropolitan Convention and Visitors Bureau. Last year, eight hotels opened in Richmond alone. The capital city recently celebrated the opening of the Hilton Garden Inn in the former Miller & Rhoads department store building downtown. Plus, the nearby Richmond Marriott is in the midst of a $14 million upgrade.
Elsewhere around the state, hotel construction projects have stalled. The Hotel Roanoke is delaying a major expansion while Salamander Resort & Spa in Middleburg — entrepreneur Sheila Johnson’s new project — has delayed its opening by a year, until 2011.
Unfortunately, the real dip among the corporate and convention markets — which hotels depend upon — will be a few years from now. “The meetings and conventions we’re hosting now were booked one, two three years ago,” says Berry.
No single solution
Hoteliers agree that there is no single solution to recovery. The key, they say, is a multipronged approach that includes cost-cutting, enhanced marketing and extra amenities. Unfortunately, cost-cutting is the fastest way to even the scales. In February, Colonial Williamsburg shaved $20 million in expenses, which included longer-than-usual annual employee furloughs and frozen salaries. Some attractions and taverns have cut back on hours.
Boar’s Head Inn in Charlottesville minimized layoffs through attrition but had to halt its owner-contributed 401(k). The resort’s salvation, according to director of sales Carol Smith, has been cross-training an experienced staff. “If we have an employee who delivers newspapers, that employee might do two other jobs, too.”
All say they are closely eyeing operating costs, but sometimes large expenditures are called for, as well. Founders Inn and Spa in Virginia Beach installed motion-sensitive lights to save on energy costs.
A $10 million renovation at Westfields Marriott, completed last year, overhauled its 22,000 square feet of meeting space and added fiber-optic technology. And Boars Head Inn recently doubled its meeting space. “It allows us to market to different types of groups,” says Smith.
Some hotels aren’t scrimping on spreading the word, either. “They are pushing more marketing and cutting room costs,” says Megan Svajda, director of government relations for the Virginia Hospitality and Travel Association. “Many are dropping prices on rooms for nights that they would typically not cut prices for.” Kingsmill Resort & Spa in Williamsburg offered its signature golf package last month for $99 per person per night, at a discount of $30.
Another trend: More and more hotels are allowing pets. The Homestead promises to “set tails wagging and whiskers wiggling” for an extra $50 per night. The fee includes turndown service and a tasty treat at bedtime. If only pleasing humans was so simple.