News for the Hospitality Executive
|By Doug Kaufman, St. Louis Post-Dispatch
Knight Ridder/Tribune Business News
Jun. 2--While hotels nationwide are feeling the effects of a slowing economy, hotels here continue to have significant numbers of business travelers sign their guest ledgers.
They're seeing different travelers, though -- more employees of long-established companies, like Anheuser-Busch and Boeing, and fewer employees of high-tech companies.
Given the softer economy, some travelers remain willing to pay for luxury while others are not, St. Louis-based hotel companies say.
"The economy is shifting, no question about it," said Bruce Seigel, head of sales and marketing for the Ritz-Carlton St. Louis, in Clayton. "But there's tremendous demand, and there are tremendous markets."
Chris Steinfals, general manager of the Adam's Mark Hotel downtown, said short-term business is off 20 percent from this time last year.
The Adam's Mark pursues business travelers. Salespeople are "making personal calls, calling up the companies and seeing if they have anything upcoming in the near future that we can book," he said. "Just a personal touch."
This has been effective -- to a point. "We've been doing quite well," Steinfals said. "But when things are dropping off, usually you never quite catch up."
Businesses are feeling the pinch, but have options. Eric Strand, director of national marketing for more moderately priced Drury Inns of St. Louis, said, "We're hearing from some of our clients, especially in the tech sector, that they've got layoffs."
Strand said, "In many cases, when you see a downturn, the travel budgets are the first to be cut. I think the thing that's interesting, though, is we're not necessarily seeing fewer travelers -- we're just seeing that, in many cases, they're looking for quality accommodations at a lower price. And we are seeing that a number of customers who are used to staying at the full-service brands are giving us a try."
Economic growth in the United States was at 2 percent for the first quarter of this year, less than half the average for the last four years. In a survey conducted by Runzheimer International, a firm in Wisconsin that tracks travel costs and trends, 54 percent of the businesses responding said they have cut back on domestic travel.
In addition, 64 percent of these businesses have reduced or eliminated conference or seminar attendance, while 32 percent require travelers to use less-expensive hotels.
At the Ritz-Carlton, "We've seen a positive impact overall . . . from the changing dynamics of the business in general," Seigel said. "One segment may be up, one segment may be down.
"Pharmaceutical, medical business still remains, educational business still remains. Some of the top-tier executives still travel. I think [the soft economy] had somewhat of a negative impact on some of the lower-tiered hotels in the economy, but we're still enjoying a great year."
The Ritz-Carlton is one of about two dozen luxury hotels and resorts in which St. Louis-based Maritz, Wolff & Co. has stakes or owns. Like its competitors, the Ritz-Carlton makes a substantial effort to draw customers.
"Through advertising, through public relations, through promotions, through press releases, through placement, through direct mail, through e-mail, you constantly can get your message out and capture your customer," Seigel said.
The corporate rate at the 301-room Ritz-Carlton includes an around-the-clock business center and access to a "technology butler" service to troubleshoot computer problems. The hotel's Sunday-Thursday guest list breaks down to 40 percent business groups and 60 percent individual business travelers.
Anheuser-Busch, Monsanto and Boeing use the Ritz-Carlton when bringing in out-of-town clients or colleagues, Seigel said.
"We're what we call 'relative luxury,' " Seigel said. "Even though the economy is changing, valuable employees are hard to keep. We may be $30, $40, maybe $50 higher in the market, but by putting them in the Ritz-Carlton on a business trip, you're showing that employee that you care about him."
With fewer travelers, reduced travel budgets and more downtown hotels competing for business, hoteliers believe their prospects won't improve overnight.
"I also understand that citywide, the transient business is down," Steinfals said. "Coupled with the fact that we have an additional hotel now, the Westin [Hotel, at Cupples Station], it will split up the pie."
The downtown Adam's Mark, one of about 25 owned by St. Louis-based HBE Corp., offers groups a discount, and the government per-diem of $90 a day is honored. About 65 percent of the hotel's guests are here for conventions.
While people attending conventions occupied 700 of the Adam's Mark's 910 rooms recently, Steinfals and his staff must constantly work to bring people in.
"We have various sales managers go after different segments of the market, like national associations, or corporate travelers, government, sports, the religious market, whatever."
Business on a budget
Drury Inns has 100 hotels nationally, including 16 here. Strand said Drury is trying to use the economic downturn to lure new business customers.
"We've gotten the word out on the street, to our sales managers, to our hotels, to call on some of these companies that we've talked to before, that may be a little more receptive to trying us out at this point," Strand said.
"We're seeing doors open that maybe a year ago when the tech boom was taking place, they were very content to spend $150 to $200 on a room. Nowadays that's just not in their budget."
Rooms at Drury Inns include amenities. "A lot of times when someone thinks about moving from a full-service property . . . they're thinking that they're giving up something," Strand said. At Drury Inns, "they get free breakfast, they get free local phone calls, most of our properties have free parking, we do free cocktails in the evenings, Monday through Thursday. Those are things that they pay for at just about every other full-service hotel."
Strand said business travelers are at the core of his company's business, and those travelers "appreciate not being nickel and dimed to death."
Drury Inns are attracting some business travelers who formerly stayed at higher-priced hotels. "We're holding our own and we certainly are seeing some of those guests who are looking for a better value right now," Strand said.
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(c) 2001, St. Louis Post-Dispatch. Distributed by Knight Ridder/Tribune Business News. BUD, BA,