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The Internet Allows for Endless Alternatives to a Hotel Room

Rental Homes, Apartments, Condos, Bed-and-breakfasts Time-Shares,
 Home Exchanges Now a Cinch to Research and Reserve

By Christopher Reynolds, Los Angeles TimesMcClatchy-Tribune Regional News

April 3, 2010 --The next time you see a hotel manager striding across the lobby with furrowed brow, look again. He may not be worrying about the guy in 415, the group in the banquet room, or even the recession that has driven room rates to their lowest levels in years.

Instead, he might be thinking about the likes of Carlos A. Hernandez of Los Angeles, who has decided he likes vacation rentals better than hotels. Or Robert Bell, a retired airline pilot in Long Beach, who has been won over by cruises.

"I guess I've had my fill of hotel rooms," said Bell, 73, who's planning another cruise this fall.

Amid all the distress wrought by the recession, this is also a moment of rare opportunity for consumers confident enough to take vacations. They can take advantage of depressed hotel rates, which are still lower than last year even in the midst of the spring vacation season. Or, like Hernandez and Bell, they can look beyond hotels.

And if they do, will they ever look back?

"We're in the midst of a structural change," said Henry H. Harteveldt, a vice president and travel industry analyst for Cambridge, Mass.-based Forrester Research. "The consumer is not going to go back to thinking, 'The only place I can sleep tonight is a hotel.' "

Industry experts cite many factors in the 18-month hotel slump, beginning with unemployment rates, a collapse in the number of business-group bookings, and generally depressed business travel, which is key to the profitability of many hotels.

Given that, some say Harteveldt is overstating the effect of vacation alternatives on the hotel business. But experts do acknowledge the increasing clout and deep price-cutting of the cruise industry, which now has room for more overnight guests than all of the hotels in Manhattan and San Francisco combined.

And travelers say the Internet has made rental homes, apartments, condos, bed-and-breakfasts and time-share units easier to research, made home-exchange matches easier, and made spare bedrooms and couches easier to wangle -- perhaps from friends and family, perhaps from strangers found on websites such as couchsurfing.org or airbnb.com.

The competition

The cumulative growth of these scattered alternatives is impossible to measure precisely -- many couch-surfers, after all, are sleeping for free. But given the attention these alternatives have been gaining, Harteveldt said, "if I were the president of the American Hotel and Lodging Assn., I'd shudder."

No, says Joseph A. McInerney, president and chief executive of that Washington-based association, he's not shuddering. He doesn't see this as a game-changing moment. But he does see a crowded marketplace.

"There are so many new ships out there, and so many new distribution channels online, and more condominiums in the rental pools," McInerney said.

In January, hotel occupancy nationwide sank to 45.1%, the lowest figure for that month in the 23 years that industry analyst Smith Travel Research, or STR, has been gathering numbers. Though occupancy has started to increase since then, room rates nationwide were still dropping as recently as February.

In February 2008, STR statistics show, the average San Francisco hotel room cost $170.40, the average Manhattan room $254.95. In February 2010, the San Francisco room was $135.13, the Manhattan room $199.65.

Jan Freitag, vice president of global development at STR, said he expects hotel rates nationwide to keep falling for a few more months before leveling off. By the second half of this year, he said, hotel rates will begin climbing again.

But the lingering recession and expanding Internet have opened many leisure travelers to hotel alternatives.

From the start of 2000 until the end of 2009, the North American cruise industry floated 118 new ships, pushing its capacity to more than 285,000 passengers.

Though prices have edged upward in recent months, Caribbean and Mexican Riviera cruises are still offered for as little as $70 per person per day, meals and entertainment included -- a number that catches the eye, even if you're a cruise skeptic.

Bell, the retired airline pilot, used to count himself as one of those. Then in 2008, some friends talked him into trying his first cruise. He and his companion, Diane Callie, joined them on a seven-day Mexican Riviera itinerary, then signed on for a 10-day eastern Caribbean cruise last year. This year, maybe the St. Lawrence River in Canada.

"The nice thing about a cruise is you can go from place to place and you don't have to pack and unpack each time you go," Bell said.

Ada Brown, owner of Seaside Travel in Long Beach, said she's noted many such conversions. While many hotel executives accept 45% vacancy rates because they're fearful of damaging their brands with price-slashing, the cruise lines "do whatever is necessary to fill those ships," she said. Perhaps as a result, "the cruise market is replacing hotels to some degree."

Worry-free booking

Meanwhile, on land, vacation rentals have been getting more attention, too, in part because the Web is soothing travelers' apprehensions.

For decades, the trouble with renting a home, condo or apartment was that travelers couldn't be sure what they would find. Now, though vacation rentals still come nowhere near the consistency of a hotel brand, the advent of detailed Internet listings -- and guest reviews -- has eased many vacationers' qualms.

Indeed, a 2009 study by research firm PhoCusWright Inc. estimated the national home-rental market to be $24.3 billion yearly, about one-fifth the size of the U.S. lodging industry's annual room revenue.

One key player is Vacation Rental by Owner, founded in 1995 to match travelers online with homeowners willing to rent out residences. It's now part of HomeAway, an Austin, Texas-based company whose worldwide listings include more than 80,000 residences in the U.S. In February, HomeAway announced its ambitions by bankrolling a "Hotel Hell" Super Bowl commercial in which Chevy Chase and Beverly D'Angelo reprised their film roles as hapless travelers Clark and Ellen Griswold.

In recent months, Expedia's popular Internet travel-search site TripAdvisor has launched flipkey.com, a site where homeowners worldwide can pay to have their rental listed and rated by guests.

For Carlos Hernandez, a 35-year-old educator at King Middle School in Los Angeles, the "transforming event" came when he stayed in a London flat with his cousin about five years ago. The experience made him feel so connected to the city, Hernandez said, that he started looking for chances to use apartments and guest houses instead of hotels. He has since done so in China and again in London.

"I wouldn't want to experience a country any other way," Hernandez said. "There's something about getting a place off the beaten path. . . . When you shop for meals in a market, something in your brain turns on that doesn't necessarily turn when you're having dinner at a restaurant and ordering your food."

christopher.reynolds@ latimes.com

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