For the first six months of this year, occupancy in U.S. hotels was 63.2%, according to Smith Travel Research, showing only a slight dip from the first six months of last year, when it was 63.4%. For the same time period, the average daily rate—the average rate hotels charge for a room—was $102.95, up 5.8% from $97.35 in the first six months of last year.
Those numbers show continued strength over last year, when the industry had more than a billion room nights and total rooms revenue of more than $100 billion, said Jan Freitag, VP at Smith Travel Research.
"The industry is doing well; we're selling more rooms than we ever have before," he said. "At the same time, we're also seeing more new rooms. The healthy industry fundamentals from the past couple of years have sparked an interest from developers."
Private equity groups have shown significant interest in the hotel business, with the most notable recent news being Blackstone Group's July announcement that it will buy Hilton Hotels Corp. for $26 billion.
With the arrival of new owners, marketers targeting the industry need to focus on return on investment in their sales pitches, Freitag said. "A lot of owners of hotel real estate are not hotel experts, they're real estate experts," he said. "So they think in one certain way, which is ROI. It's all about the return."
Focusing on the guest
Guest experience is also an important factor for companies to consider when developing products for—and marketing those products to—the hotel industry.
"Consumer expectations just keep getting higher and higher," said Gary Leopold, president-CEO of ISM, a Boston-based advertising and marketing agency that specializes in the travel and leisure industry. "Today's standard amenities in any resort or hotel are things that were once only in mid- or upper-scale hotels. ... Even midmarket or budget hotels are required to deliver things that maybe 10 years ago they didn't, which puts a greater burden on trying to control cost yet still meeting that guest expectation."
With high occupancy and rates, hotels have the money to meet those guest expectations, said Dan Hogan, publisher of Hotels magazine, a Reed Business Information publication, and as a result are spending on items such as flat-panel TVs and high-speed Internet access. "It was beds the last couple of years," he said. "Now, it's TVs."
Companies selling environmentally friendly products also may find that hotel executives are a receptive audience. "Everything's going green," Leopold said. "There's a huge consciousness level around being environmentally friendly. Hotels want to be perceived as being ecologically sensitive, so products and services that help them do that are in great demand."
Industry consolidation has, however, made a marketer's job more difficult in at least one significant area—maintaining database continuity, said Joe Rook, VP-sales at iBahn, a provider of broadband services to hotels and conference venues. "Hotels are being bought and sold at record rates, and when you're attempting to go back to a hotel to contact them or to contact them for the first time, you don't know who's there anymore, who owns them and who the influencers are in the sale of a product. ... Trying to keep up with the rate of change, frankly, is almost an impossible challenge."
Hotels leverage buying power
One way companies deal with the challenges of consolidation is to sign on with procurement services companies such as Avendra, which was founded by ClubCorp USA, Fairmont Hotels & Resorts, Hyatt Hotels Corp., Intercontinental Hotels Group and Marriott International. "The chains want to leverage their buying power for their hotels and their franchisees," Hogan said. "So there's a big push for the vendors to get corporate approval to be `speced' by the brand. You can't do it hotel by hotel."
As for where to reach hotel executives, such media staples as print advertising and direct mail are still reliable, as are industry events. For many products—such as the aforementioned flat-screen TVs—trade shows are still the best way to give hands-on demonstrations, Hogan said. "To truly get a sense of how the TV is going to work, you have to see it in operation," he said. "You go to a trade show, and see all the different models and are able to see a lot in a short amount of time."
Yet, like marketers in many other vertical segments, those targeting hotel executives are finding that online marketing is an effective means of reaching their audience. "For our particular brand, our online business has grown dramatically," Hogan said.
Chad Giddings, senior VP-strategic planning at MMG, a Kansas City, Mo.-based advertising and marketing agency that specializes in the travel, hospitality and entertainment industries, said the ideal medium depends on the particular product—but that a strong online presence is paramount.
"With the advent of a lot of new types of marketing tools," Giddings said, "especially some of the online options, it starts with having a good, solid Web site that shows the value of what you do as a company and is professionally created and really does a good job of selling yourself and positioning your product."