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Plumbing the Depths for Pricing.
By Vijay Dandapani
Wednesday, 24th February 2010
 
It seems that there's no let up on the way down for hotel pricing as Britain's Times newspaper reports on the upmarket Intercontinental hotel chain's acknowledges that "while business to its top-end InterContinental-branded hotels had been hit by the collapse in corporate spending, weekend discounts had lured customers who had never stayed in five-star hotels before."

The luxury hotel chain's CEO, Andrew Cosslett notes that "weekends, normally slower than weekdays in its city centre InterContinentals, were now the busiest part of the week (and) when you talk to management at our hotels in San Francisco or New York, they say their car parks are full and they're having to take overflowing parking."

Mr. Cosslett also observes that "compression in rates between midscale and luxury hotels" had thrown up anomalies. saying that "we've had weekends in New York and London where our Indigo property has charged more than the InterContinental. The dynamics have been out of kilter. That's been a phenomenon that we haven't seen before." Mr. Cosslett may not be entirely right on that front as there was a similar disconnect, at least in the US and particularly in New York, in the aftermath of 9/11 when there was a hesitancy on the part of business travelers to be seen in high end hostelry.

The foregoing affliction seems also to have hit celebrity owned lodging as well as USA Today's widely read Hotel Check-in blog notes that Richard Gere is having trouble filling his 8 room luxury inn, the Bedford Post Inn, in upscale Westchester County in New York. Hotel Check-in says that the Inn has resorted to discounts of upto 30% to fill its tiny stable of beds. Discounted pricing has also roiled the ANA hotel chain with the result that Morgan Stanley is looking to walk away from its investment.

Looking longer term Mintel, a supplier of consumer, product and media intelligence that purports to provide a preview of worldwide trends in consumer behavior amongst other things, notes that it "expects to see more people taking off in the new decade with a 6% increase in travel spending expected for 2010." That is the good news. The "bad" news as Mintel observes is that "the growth will be slow and will mainly stem from reduced prices on hotels, rental cars and airlines, all trying to get hesitant consumers to travel again."

No rest, as they say, for the weary but if the recent numbers of one upmarket retailer's (Whole Foods) are anything to go by consumers may actually be beginning to come out of the cold to shop and, hopefully, spend in higher end hotels.

Vijay is Chief Operating Officer and part-founder of Apple Core Hotels- a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.Member of the board of Directors - Hotel Association of New York.

www.vijaydandapani.com
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