Comments on: Will hotel overbuilding mean luxury deals?

By: Undaunted: World’s largest hotel planned for Las Vegas | Upgrade: Travel Better

Fri, 09 Jan 2009 22:09:49 +0000

[...] timing is interesting, to say the least. Hotel overbuilding (and a subsequent recession-enhanced glut of rooms) has been the predominant theme of late, so why [...]

By: Is 2009 the year of the apartment? | Upgrade: Travel Better

Is 2009 the year of the apartment? | Upgrade: Travel Better — Mon, 05 Jan 2009 20:34:14 +0000

[...] Combine an increase in recession-era demand from companies hoping to lower lodging expenses with a decline in hotel investment, and 2009 could be the year of the business [...]

By: Mark Ashley

Mark Ashley — Thu, 18 Dec 2008 13:27:44 +0000

I see major media have picked up on this theme now, too:

Time Magazine 12/17/08: “Hotels Try to Adapt to Hard Times”

Hotels are struggling to attract patrons with everything from free breakfast to quirky promotions like an adults-only couples weekend at a resort in Bermuda, complete with counseling by sex therapists. There are more upgrades, more freebies — and more top hotels quietly offering their rooms at lower rates on Priceline.com.

New York Times 12/21/08: “Bargains Pop Up in the Luxury Suite”

While most high-end hotels are trying to avoid dropping room rates, many are offering discounts like free nights or “hundreds of dollars of spa or resort credits,” Mr. MacDonald said.

and this tip:

For the most bang for your buck, take your vacation during that sweet spot just after New Year’s. “After the holidays and before Presidents’ Week, which is traditionally a busy time, there’s very likely to be pockets of weakness,” said Scott D. Berman, a principal and hospitality consultant with PricewaterhouseCoopers in Miami, “so it’s quite practical that on the 7th or 8th of January we see a whole host of deals.”

So it’s both an oversupply of rooms and a shortage of demand. But the oversupply may not last forever, as hotels are wising up:

The number of hotel guest rooms falling out of the U.S. construction pipeline was up 75% in November, and industry experts expect the trend to continue.

November figures from Smith Travel Research show 93,219 guestrooms have been abandoned in various stages of development, from pre-planning to already under construction. That figure compares to 39,887 that fell out of the pipeline in November of 2007 and is 8,729 higher than the number abandoned in October 2008, STR said.

By: Mark Ashley

Mark Ashley — Wed, 17 Dec 2008 22:21:08 +0000

Sara, I would bargain hard, especially if you have some wiggle room and aren’t hung up on using specific properties. Your standing as a reliable customer would likely help you get a better deal, too.

Jack, I’m not positive when this discounting would happen, but I think we can start to see some softening as early as the new year. Much like real estate, it’s not going to be the same everywhere, either. The most overbuilt markets (Miami?) are likely to be hit first. A good indicator will be if we start to see superb deals on the services like Priceline and Hotwire that pick up the “excess” inventory.

By: Jack - eyeflare.com

Jack - eyeflare.com — Wed, 17 Dec 2008 13:27:37 +0000

So when do you expect hotel rates to actually go down systematically? Right now, the rates are (somewhat) down because of the credit crunch, but there aren’t all that many real deals available. Maybe tail end of 2009?

By: sara

sara — Wed, 17 Dec 2008 05:20:08 +0000

I book large blocks of rooms for conferences, so I just wanted your opinion on whether you think it would be wise to renegotiate some rates for 2010? I have contracts for 2009, but am just getting to the 2010 ones – i am wondering if my group, as a good reliable consistent group might have more leverage?