Plan Your Meetings

Hotel rebound challenges travel managers

The hotel industry has rebounded and business travel is back. Across the country, hotels are experiencing occupancy and revenue levels not seen since 2000. Coupled with a limited supply of hotel rooms due to hurricane evacuees seeking shelter in hotels across the country and properties being converted to condos in some major cities, the turnaround has led to new challenges for corporate travel managers, including meeting planners.

PricewaterhouseCoopers, the consulting firm, forecasts that the average daily hotel rate nationwide will rise by 5.6 percent this year, following a rise of 5.3 percent reported by Smith Travel Research for 2005. In many major cities, the rate increases are expected to be even higher, from 7 to 10 percent.  "Also, guests will see even larger increases during peak periods," says Bjorn Hanson of PricewaterhouseCoopers Hospitality & Leisure division.

The increase is a result of rapidly increasing occupancy, estimated at up to 70 percent in hotels frequented by business travelers. Also, hotel owners are recovering record levels of investment in renovations and enhancements, including improved beds, flat screen televisions, high speed internet connections and a long list of other enhancements, such as in-room exercise equipment, quality sound systems and cordless telephones.

In a recent survey, National Business Travel Assn. (NBTA) members indicated that 73 percent of respondents expected their respective companies to spend more money on hotels than the previous year due to room rate increases. Spelling even more good news for the hotel industry, 41 percent of respondents reported that they anticipated spending more on hotels because of an increase in the number of business trips taken in 2006.

With hotel rates steadily increasing, travel managers are charged with ensuring that their respective companies receive the best possible value for their travel spend. Some businesses are responding to the rate hikes by limiting the amount allowed for hotel stays, or booking at midclass properties rather than luxury hotels.

While the market may have turned in favor of hotels, meeting planners can take advantage of the heated-up competition as hotels attempt to regain customer loyalty and attract new corporate clients. Hotels are offering everything from free in-room Internet access to healthier breakfast options in an effort to entice corporate clients.  Hotels, which were previously cutting back on such amenities and new building projects, are investing in property upgrades and renovations to further increase property appeal.

As the hotel industry continues to rebound, the travel manager's role in strategic planning, budgeting and negotiating will become increasingly vital. One piece of advice — make sure negotiated rates are verified at booking.