Industry News ~ Snapshot

Internet Sales Push Average Room Rates Down 2.1%
With hoteliers continuing to lose pricing power average room rates are down 2.1% this year according to the Labor Department the concern over discounted rooms is quickly turning into a paradoxical predicament. Revenue managers want to use the Internet as a distribution channel to put more heads in beds, yet at the same time an over reliance on the Internet could actually have the opposite affect, eroding already faltering profits, some experts say. This issue has become one of the biggest problems facing hotel operators in a year chock full of critical concerns. So much so that in a recent Hotel Interactive poll, more than 60% of respondents believed current Internet pricing models would adversely affect rate structures resulting in thinning profit margins. "I think initially the brands let the intermediaries take more direct control of the consumer and were a little late in responding," said Thomas J. Corcoran, Jr., President and CEO with FelCor Lodging Trust, a lodging REIT that owns and manages 184 hotels.> Top

So How Can Hotels Work With The Internet?
So how does a hotel operator trying to make occupancy and RevPAR goals resist the allure of selling their perishable inventory via the Internet? "You don't," Cocoran said. "The bottom line is if you have empty rooms and you can rent them at a profit above cost, and it provides positive cash flow you will do it. The risk there is not building brand loyalty because when the market turns around, they may or may not come back when the cycle comes around. It is filled with both risk and reward." In the short-term it's hard to argue the Internet hasn't staved off further disaster. According to Forrester Research, nearly 26 million US households will book leisure travel online in 2002, 12% more than in 2001, driving an estimated $22.6 billion in revenue. The firm expects that number to hit an astronomical $49.7 billion by 2007. Corcoran added that to succeed, operators have to remember the most important part of the hotel business: hospitality. "It's all about the delivery of services such as the check-in and overall guest experience. It must be the services you provide and you have to do it right and do it well." > Top

American Express Survey Tells What Makes A Good Hotel
What makes a good hotel? According to an American Express poll of 1,400 international business travelers from 14 countries, Internet access and free breakfast rates are nearly equal in appeal (29 percent and 26 percent respectively), followed by business facilities (16 percent), VIP check-in and checkout (13 percent) and health club access (12 percent). Americans (40 percent), Mexicans (39 percent) and Japanese (35 percent) are most concerned about being connected to the Internet in the room. Britons are the least concerned (16 percent). A free breakfast rates high among Swedes (42 percent), Germans (34 percent) and Britons (31 percent). Asians most value business facilities Singaporeans (24 percent), Hong Kong travelers (24 percent) and Japanese (23 percent). > Top

Lodging Demand Expected To Remain Low Says PWC
Heightened concerns about a possible war with Iraq and the threat of terrorism will keep lodging demand down through the third quarter of 2003, according to a report by PricewaterhouseCoopers. The firm said the average loss in occupied room nights remains "considerable," with 33,100 fewer hotel rooms booked in the first quarter of 2002 and 31,300 fewer rooms sold in the second quarter, compared with the same periods in 2001. By comparison, 92,000 fewer rooms were booked in the fourth quarter of 2001, compared with the same period a year earlier. "Though lodging picked up in some measure during the first half of 2002, actual demand remains weak and below what would be consistent with observed levels of U.S. economic activity," said Bjorn Hanson, chairman of PricewaterhouseCoopers' leisure practice. > Top

HSMAI Announces Winthrop W. Grice, Albert E. Koehl Awards
Recognizing individuals who have made significant contributions and lasting impressions on the hospitality and travel industry, HSMAI announced the recipients for its annual Winthrop W. Grice Award for public relations and the Albert E. Koehl Award for advertising and marketing excellence.

The 2002 recipients of these lifetime achievement honors, who will be acknowledged at the Annual HSMAI Travel Industry Awards Gala on Jan. 28, 2003 in New York City, are Bunny Grossinger, who will receive the Grice Award, and Peter Warren, CHME, with the Koehl distinction. For information on tickets and table sales for the HSMAI Awards Dinner at the New York Marriott Marquis, contact Cass Bullock at phone: (609) 628-2348; or email cbullock@hsmai.org.

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National Events & News

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Selling Tips How to Sell When Your Price is Higher by Kevin Nunley www.drnunley.com (888) 429-6203

Mark writes with a challenge many of us face. His competitors charge less, yet he still has to make sales.

He writes, "This is a very competitive market where price is the major factor in the buyer's eyes. How can I first persuade companies to at least give my company a try, even if we aren't the cheapest, and secondly, generate some sort of loyalty from these customers in the future?"

The good news is most customers rank price well down the list of things they consider when they buy. Quality and service are almost always at the top.

If you can't match competitors on price, show prospects how your higher quality and better service more than make up for the price difference. A business customer is really interested in the bottom line. Show them how stepping up to a better product will increase productivity and reduce equipment costs. In this case, Mark is selling fuel for expensive farm equipment. He can show prospects how his higher grade fuel can save on repairs later on.

Even more important, show how your better service will make the customer's life or job easier. You may provide free delivery, more frequent delivery, be easy to get on the phone for advice, or simply smile when you're filling the order.

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