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Optimistic Forecast Bodes Well for U.S. Hoteliers

David M. Brudney, ISHC, October 25, 2011

We’ve been inundated for so long with so much media economic gloom and doom - - exacerbated by recent extensive coverage of the citizen demonstrations in our Nation’s Capital and on Wall Street - - it’s no wonder to me hotel sales professionals may be guilty of a self-imposed “business solicitation paralysis.”
Well, if ever those hotel sales pros needed some new motivation to reenergize their proactive pursuits for new corporate travel, meetings and event business, a recent report by PKF Hospitality Research (PKF-HR) should help.
PKF-HR paints a very optimistic picture for U.S. hotels by end of year.  The report refutes the concerns within our industry that the apparent stalling of the U.S. economy will lead to a slowdown in travel - - and consequently, corporate meetings and events. 
PKF-HR revised it previous forecast for 2011, which predicted a 6.9% increase in revenue per available room by year end.  The more optimistic projection has RevPAR increasing to 7.2%, fueled primarily by rate gains.
Other experts in the industry, such as Smith Travel Research, mirrored the optimism laid forth in that report:
  • Demand for July was higher than any previous month ever
  • Demand for August was third best ever recorded
  • Absolute demand continues at a record-setting pace
  • Overall, U.S. annualized demand has never been higher
There’s plenty of optimism on the meetings and events side as well:
“We see a 10-year high for meetings planned, 4% higher than 2001 year on year,” said Brian Stevens, founding President & CEO, Conference Direct, a meeting services company that books more than 2-million group room nights a year.

A bold statement on U.S. unemployment’s impact on hotel travel
PKF-HR’s report made an interesting observation about the U.S.’s stalled unemployment rate of 9.1% and its impact on hotels.
“The unemployment rate among educated workers who make up a large share of the traveling public is less than 5%.”
The highest level of unemployment, according to the U.S. Bureau of Labor Statistics, is among Americans with “limited education” - - those not likely to use hotels when traveling.  
High unemployment no longer an excuse
 for lack of roomnight production
Armed with this new information, hotel sales pros should no longer use the economy and high unemployment as an excuse for why they can’t book more individual travel and meeting and event business from U.S. corporations. 

The PKF-HR report also reminds us that while unemployment stands at 9.1%, that means approximately 91% of the labor force have jobs. Additionally, employed workers are receiving real wage increases.

And, most interesting of all - - and most relevant to the point I’m making here - - the report finds:

  • Total real personal income has already recovered and surpassed its historical peak
  • Moreover, “corporate profits keep soaring to new highs which add layers of confidence for spending on business travel.”
Cash rich companies

A Federal Reserve chart shows a very steady growth in U.S. corporate profits dating back to the first quarter of 2009.

The question begs asking: Is high unemployment and uncertainty over the economy causing U.S. corporations to be tentative about the if, where and how to spend it?

Far be it for me to play the role of economist, but I do believe companies should be investing now more than ever in business travel and most assuredly in planning and booking more corporate meetings and events. 
Here’s some new grist for the mill:
“Companies should invest in the U.S.,” said Jeffrey Immelt, chairman and CEO of General Electric and President Obama’s appointed “Jobs Czar.”

Appearing on CBS “60 Minutes,” Immelt said, “(The U.S. is) still the world’s biggest economy. If companies are going to sit on cash, they’re going to lose because only the people that are going to invest their way through this crisis are going to win.”

GMs, sales directors and sales teams take note: Use this new, positive information as sound bites and talking points in your dialogue with a reenergized proactive pursuit of both travel and corporate meetings and events business. Give testimony to companies that have already “seen the light” and are committed, with positive results to show, to making that investment.

David M. Brudney is a charter member of International Society of Hospitality Consultants

David Brudney & Associates – - 760-476-0830 -

David M. Brudney, ISHC, is a veteran hospitality sales and marketing professional concluding his fourth decade of service to the hospitality industry.  Brudney advises lodging owners, lenders, asset managers and operators on hotel sales and marketing “best practices” and conducts reviews of hospitality (as well as other industry) sales and marketing operations throughout the U.S. and overseas.  The principal of David Brudney & Associates of Carlsbad, CA, a sales and marketing consulting firm specializing in the hospitality industry since 1979, Brudney is a frequent lecturer, instructor and speaker.  He is a charter member of International Society of Hospitality Consultants.  Previously, Brudney held hospitality sales and marketing positions with Hyatt, Westin and Marriott.


David M. Brudney, ISHC, Principal 
David Brudney & Associates 
Carlsbad, CA 
760-476-0830 Fax 760-476-0860 
(c) 760-994-9266
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Also See: Paid Search Producing Positive Results for Hoteliers / David Brudney / August 2011

It’s Time to Revisit the Art of "Check-Building" and "Add-Ons" / David Brudney / July 2011

Potential Business Lost by Hotel Sales Department Interruptions and Lack of Focus / David Brudney / June 2011

That Commitment to Excellence is Harry Mullikin’s Legacy / David Brudney / May 2011

Hybrid Meetings: An Idea Whose Time Has Come / David Brudney / April 2011

Next Gen Hotel Sales Pros Hungry for Storytelling / David Brudney / March 2011

Upselling Works Best Upclose and Personal / David Brudney / February 2011

Adapting to Change: Hotel Sales Professionals New Year’s Checklist / David Brudney / January 2011

Hotel Sales Professionals: Would You Buy What You Are Selling? / David Brudney / December 2010

Meeting Planner Voices Concern over Demand Return / David Brudney / October 2010

Value of Face-to-Face Meetings Resonates Even More Today / David Brudney / September 2010

Expect Hotels to Pare Back on Perks in 2011 While Implementing Modest Increases in Room Rates / David Brudney / September 2010

Good News for Meetings-Driven Resorts: Site Inspections and Bigger Group Bookings are Back! / David Brudney / August 2010

Kimpton Is Bullish on Fourth Quarter 2010 / David M. Brudney / June 2010

Landmark Decision by Arbitration Panel on Aviara Resort / David M. Brudney / April 2010

Group Business Comeback in the Cards / David M. Brudney / March 2010

Applying Five Tenets of Hotel Sales and Marketing in These Tough Times / David M. Brudney / January 2010

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