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Free Breakfasts Don't Cut it Anymore; Extreme Hotel Discounts
 Reflect the Desperation of an Industry

By Hugo Martin, Los Angeles TimesMcClatchy-Tribune Regional News

April 10, 2010 - --Free breakfasts don't cut it anymore.

The nation's hotels, still in the grip of an economic downturn, are borrowing the sales strategies from the nation's retailers to woo overnight guests.

If you liked Kmart's "blue light specials," you might like the limited-time bargains offered by Hilton Hotels, among others.

Superstore Beverages & More throws an annual 5-cent sale, but the national hotel chain of Red Roof Inn recently launched a 1-cent sale.

Fans of high-end clothier Barneys New York clamor for its "private sales." But you can also get in on private sales offered by hotels like the Le Parc Suite Hotel in West Hollywood.

To get through the rough times, hotel managers around the globe are relying on as many as five or more tactics to lure guests, according to a survey released last month by Cornell Nanyang Institute of Hospitality Management.

"There is no question that it's because of the economy," said Robert Gilbert, president of the Hospitality Sales and Marketing Assn. International, a trade group for sales and marketing professionals in the industry. "We are trying to backfill all of the vacancies."

Hotel guests who get in on these special sales can save as much as 60% on rooms, proprietors say.

Jeanae DuBois, a marketing executive from Fresno, booked a hotel in San Francisco for $44 a night through a limited-time sale posted on the Internet to a select group of fans of the Joie de Vivre hotel chain. The rooms normally rent for more than $120 a night.

"These amazing rates are providing me the opportunity to live out my goal of making 2010 my year of travel," DuBois said.

Hotel promotions are nothing new, but hospitality experts say the variety of promotions and the extreme discounts reflect the desperation of an industry that is struggling through one of the worst slumps in nearly a decade.

Among the most popular tactics used by hotel managers are room discounts, extra night's stays and value-added packages that include spa treatments, parking and meals, according to the Cornell survey.

Hotels are also using social media more often to draw in customers, the survey said.

"Whenever there is a big drop-off for hotels, we use any and all mechanisms to drive business," said Clem Bason, president of Hotwire.com, the online hotel booking site that discounts room rates by providing the names of the hotels only after guests reserve a room.

There is good reason for hotels to pull out all the stops.

The average occupancy rate in U.S. hotels in 2009 was about 56%, the lowest it has been in more than 20 years -- even lower than the average during the travel-wary days after the terrorist attacks of Sept. 11, 2001.

Revenue per room has dropped even more, leaving hotel owners across the country struggling to pay their mortgages.

To lure guests, many hotels still rely on traditional sales strategies, such as offering a complimentary breakfast or an extra night free.

But industry experts say more cash-starved hotels are turning to promotional schemes heavily used in other industries, such as limited-time sales, private sales for select customers, last-minute bargains and discounts for booking nonrefundable rates.

Hilton Worldwide, for example, recently kicked off a monthlong sale that, for the first time, included its 10 hotel chains. Under the promotion, guests who booked a room in January for any weekend in 2010 could save as much as 50%. The January sale brought in about 75% more reservations than a previous sale that was limited to hotels in Europe, the Middle East and Africa, a hotel chain spokesman said.

Dan Colwell, a frequent traveler from Boston, took advantage of the deal and got a free breakfast, plus a $25 discount for a one-night stay in February at the Hilton Los Angeles Airport hotel.

"The price was better than their standard price without breakfast," Colwell said.

And then there are the bargain rates offered during private sales, limited to loyal customers and those who sign up for e-mail alerts via Twitter or Facebook.

Raymond Gonzales, a nursing student from the Bay Area, said he had saved at least $200 for a night's stay at a San Francisco hotel thanks to a private sale he learned about through Twitter alerts.

"They have offered deals at many of their prime hotels and I am always taking advantage of them," he said.

The Red Roof Inn chain kicked off a 1-cent sale this month, but limited that price to only one room at each of the chain's 350 properties for each of the 15 days of the promotion.

The reason for such gimmicks is simple: Hotel managers stuck with empty rooms can't offer discounts to a few guests without infuriating the guests who are paying full price.

By relying on such promotional tactics, hotel managers can justify the discounts as special deals, offered only under limited circumstances.

Hotels also offer many discounts anonymously through websites like Priceline.com and Hotwire.com. These sites keep the name of the hotel secret until guests make a nonrefundable booking. A new player in the online business is getaroom.com, which identifies the hotel but gives the lowest rates only to guests who call a toll-free number to make the reservations.

The deals benefit both guests and the hotels.

"We've started to do different packages to give consumers more of a choice," said John Douponce, general manager of the Le Parc Suite Hotel in West Hollywood.

In the last month, the 154-suite boutique hotel launched two 48-hour sales, offering discounts of as much as 40% for guests who take advantage of the deals. The sales are announced only to those who sign up for alerts on Facebook and Twitter.

These limited-time sales have increased bookings by up to 30%, Douponce said. "It's been quite successful."

hugo.martin@latimes.com

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