Hotel Revenues Predicted to Drop through 2010

Two recent studies point to continued challenges for hotel operators. Nationally, thousands of new rooms are coming online in 2009 as the overall demand falls and will continue to drop through 2010 according to Smith Travel Research. And Cornell University’s Center for Hospitality Research most recent study finds that, globally, the top challenges for the industry are ‘customer rate resistance, contract renegotiations, competition and price wars.’449599_resort_room

The continued pressures of profitability and the predicted drop in business travel through 2010 are among several factors forcing hotel operators to rethink their strategy. In the Cornell study, marketing concerns accounted for 14.5% of all comments and 23.5% of operators planned to increase marketing-​related activities. These activities may include:

  • Contracting with new partners such as airlines or rental car companies
  • Improving the loyalty programs to improve business from the best clients
  • Building business from new leisure or travel segments

All of these strategies will involve increased marketing as hotel managers attempt to turn in results that exceed the projected 55.1% average 2010 occupancy and the associated average rate of $93.16.

[Source: Cornell Hospitality Report, August 2009.
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.