Throw in Champagne and a Massage, and We’ll Take the Room

August 14, 2008 | Uncategorized

All this talk about how people just aren’t traveling this year is getting to me.

I mean just about every day I’m still hearing — and it’s approaching ad nauseum, I might add — all this talk about “stay-cations.”  Open a newspaper or magazine and there it is, turn on the TV or read a blog online and there it is — more news about more people staying home this year. It’s enough to make you run to the nearest airport and lie in front of an incoming 747.

Yes, people haven’t traveled as much this year as they did in the past, mainly because of the increased cost of a vacation, especially the airfare. Those heady days of cheap oil and cheap travel are now only fond memories for most of us.

And since no one’s traveling, no one’s staying at hotels. At the Olympics in Beijing this week there’s a glut of empty hotel rooms (including about 50 five-star properties, more than twice the number five years ago). And tens of thousands of new hotel rooms will be coming online throughout the remainder of this year.

It’s the same in Europe where hoteliers are feeling the pinch of the smaller wave of American tourists this year. We rented a villa in Tuscany last year — villa rentals are a great way to see different areas of a country, by the way — and I’m now getting emails telling me that they’re auctioning off villa vacations on eBay this year during the high season of September.

Even Mexico’s hotels are at risk. According to a report last month it’s almost as expensive in Mexico City for a tourist today as it is in Washington, DC — so just watch the impact rising costs will have on its hotels if fewer Americans travel south of the border.

And it’s not any better on this side of the border. From Hawaii to Boston, hotel occupancy is way down. Deals in places such as Las Vegas abound. Travelocity, for example, is now offering three nights at The Mirage, including air, for as low as $353. Others are offering tremendous discounts on show tickets. If Elvis was alive some hotel would develop a package to sleep with him.

Just pity those hoteliers all over the world who are now waiting to welcome you to their empty. lonely lobbies…I’m sure the first tear is welling up in your eye.

Oh, just put away the tissues already. Have you forgotten how well the industry was doing before the price of oil hit the fan? Or that for years U.S. room rates rose at twice the rate of inflation? And that sometimes you couldn’t get into your hotel of choice because it was full despite the high room rates?

Now I am not trashing hoteliers since I know and respect a number of them. But I will say that the pendulum has now swung the other way, finally giving the traveler, not the hotelier, the advantage. But, obviously, if you want to enjoy this advantage you’ve got to get traveling — the last time I checked it was a bit difficult to do for someone content to lie on the living room couch watching reruns of I Love Lucy.

As in Las Vegas, many hotels across the U.S. have also cut prices — some dramatically. In addition, there are probably thousands right now giving out gas cards to those who drive up and spend a night. Others are throwing in free breakfasts and dining credits, free golf and massages, free parking, you name it.

But the real place to find hotel deals are major cities and other popular fly-in destinations where people have just stopped flying-in. The exceptions are such places as New York, Miami and Philadelphia since demand by European travelers has kept demand and prices high there.

Deals don’t exist only in the U.S. but abound all over the place — in Latin America, Asia, the Pacific, just about anywhere Americans have been traveling over the years. In the Caribbean, for example, Sandals — operators of a gaggle of couples-only resorts — has been giving discounts of over $1,000 per couple, which they are tagging on to bills as an “air credit.”

An air credit? Why not just lower the price of the package? I would suspect that some savvy marketer knew if they did that when they go to raise it back to normal it will appear to be a price increase to its customers. And that’s not good for one’s image…or business.

The ones who are really aware of that are the luxury hotels at the top end of the business. In fact, many GMs of the world’s most prestigious properties would rather lie next to you on the runway before they even considered lowering room rates. The reason: it diminishes the perceived value of the property.

Look at it this way — service is what differentiates identical upscale hotels. This is the added value that allows them to charge higher rates. Cut that rate and you risk engendering the perception that you’ve cut the value and service your clientele demand — not something you want to do with a clientele that willingly pays for the service.

So instead of lowering prices, upscale hotels will offer additional services at no charge — something of much greater importance to the affluent than the cost of the room. In fact, to avoid cutting rates at a luxury property most general managers will provide virtually anything that may increase the value of your stay, from a free limo to free meals.

“An upgrade to a suite? That’s not a problem sir.” “Would you like a free spa treatment madam, or a cabana on the beach?” “Perhaps some Champagne and a massage to relax you?”

Often, in economic times such as this, one only needs to ask.

Jim Ferri