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Philadelphia Luxury Hotels Experience 14.4% RevPAR Decline in April

The Philadelphia Inquirer Business Travel Column

By Tom Belden, The Philadelphia Inquirer
Knight Ridder/Tribune Business News 

Jun. 19--If you're a traveler in search of a hotel room, especially if you want to splurge on some luxurious accommodations this summer or fall, then count yourself lucky. On the other hand, if you own or operate a hotel, smiling as your guests check in may be a little harder these days. 

After an excellent run going back five or six years for most hoteliers, the measures of health their industry uses have suddenly weakened, mostly because business travel has taken a downturn this year as a result of the economy's losing much of its steam. 

While the first quarter of the year wasn't bad, April and May turned much worse, with business travelers in droves apparently staying close to home, according to consultants and others who monitor the hospitality business. 

For the customer, this means the chance to get some real bargains. Hotels watched their occupancy levels drop this year compared with 2000, and now, are responding by cutting their rates as a way to draw more business during slack times, say the experts. 

In the Philadelphia area, you might think about checking rates at the newer luxury hotels, even if you thought they were beyond your budget. 

"The hotels with higher rates are the ones that really got shellacked, both in terms of their rates and their occupancy in April," said Peter R. Tyson, who directs the regional office of Horwath Horizon Hospitality Consulting here. 

For the area's luxury hotels in April, Tyson figured their revenue per available room -- that's the amount of money they took in divided by all the rooms they have for rent -- plunged by a whopping 14.4 percent, a clear sign that rooms were going begging and discounts were needed to help fill them. 

PKF Consulting's national monitoring of hotels, too, found the same pattern. Luxury and upscale hotel chains such as Four Seasons and Ritz-Carlton, along with full-service hotels operated by groups such as Hilton, Marriott, Sheraton, Westin and Wyndham, saw occupancy levels and the average daily rate go soft in the first quarter, and signs of a continued slide in April. 

At what the industry calls the mid-market brands, which include Best Western, Hampton Inn, Holiday Inn, Quality and Ramada, business has basically been flat, PKF found. 

"The first quarter is always slow," said Robert Mandelbaum, PKF's national director of research. "Now it looks like a bad first five months. The type of performance we're seeing can't be made up [by an increase in business] the rest of the year." 

The decline or leveling off of business for hotels is part of a larger trend, reported also by airlines, of businesses taking a hard look at their travel budgets and cutting back on trips this year. 

Rosenbluth International, the Philadelphia-based company that is one of the world's five largest travel agencies, began seeing a decline in travel in January, said chairman and chief executive Hal R. Rosenbluth. 

"Overall, if it weren't for new business we've gotten, we would have seen a decline," he said. "And it did accelerate over the past two months." 

The weakening of the economy seemed to have taken many businesses by surprise, Rosenbluth added. "This was not just in travel," he said. "This was a stealth slowing. Nobody saw it coming." 

Among other reasons that luxury hotels may be seeing more of a drop in business than mid-priced brands is that many companies are more stringently enforcing travel policies that require their people to stay in certain types of hotels to save money, Rosenbluth noted. 

Companies also are sending fewer travelers to meetings, holding fewer meetings than they were last year, and making sure that each trip accomplishes more than it did in the past, he said. 

"We do the same in our own company," he said. "We make sure each trip is a worthwhile trip. We make sure we can bunch as many visits to clients as possible into one trip." 

And while in your room. For many hotel guests, the next best thing to getting a good night's sleep is a good shower in an inviting bathroom. Westin Hotels & Resorts says that's why it's spending $10 million to improve the experience in its 70 hotels in North America. 

Westin said its new Heavenly Bath includes replacing showerheads with double-headed devices that have five jets and a variety of spray options, using better towels and bathrobes, and installing curved shower curtains that provide an extra eight inches of elbow room. That last feature "eliminates the dreaded shower curtain cling," the company said in a news release. 

The Heavenly Bath follows Westin's introduction of what it calls the Heavenly Bed, which has an all-white pillowtop mattress and pricey sheets and bedcovers. 

Heaven only knows what they'll do next to lure you into one of their rooms. 

Send your comment or question about business travel to Tom Belden, The Inquirer, Box 8263, Philadelphia 19101, or e-mail at [email protected]

-----To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com 

(c) 2001, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News. 


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