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HB ON THE SCENE: Optimism Permeates Hotel Data Conference

Thursday August 14th, 2014 - 8:15AM


Vail Brown, VP/global business development and marketing, STR

NASHVILLE, TN—The Hotel Data Conference, held here at the Loews Vanderbilt Hotel, evaluated some key reasons for success in 2014 and predicted whether that would hold true in 2015.

In the opening session, Adam Sacks, president, Tourism Economics, noted that the prevailing rule of thumb is that room demand and GDP tend to move in the same direction, but that hasn’t been the case in 2014. “In 2014, GDP has been on a yo-yo with a contraction of 2% in the first quarter followed by an expansion of 4% in the second quarter,” he said. “Meanwhile room demand pays no attention to any of it and increases 4%, above anyone’s expectation.” He added that relative to employment, room demand has been on even more of a boom.

“This particular service has experienced more growth since the beginning of 2014 than any other good or service at this level of aggregation in the United States,” he continued, noting that this situation poses a question: “Has lodging set a new trend line from which we now need to do all of our forecasting, or is a reversion to historic trends and averages more likely?”

Sacks attributed the extraordinary growth to these factors: strong gains in personal wealth; continued stellar performance of corporate profits; growth in what have been laggard sectors; resurgence of group demand; residential power outages; and a rebound from the federal government shutdown. Sacks noted that these factors would likely be tempered in 2015, relative to 2014, so the industry will likely revert to trend. “We believe that even though GDP is going to accelerate next year, demand is going to grow not as fast as this year, bringing us back to historic averages,” he said. “I don’t want to be mistaken for the guy that thinks everything is coming to an end. I think things will continue to grow, but just not at the rate that they have been.”

Vail Brown, VP, global business development and marketing, STR, noted that at the end of 2013, the industry hit five all-time highs out of the six key performance indicators. “We had more rooms to sell than we ever had before,” she said. “Secondly, we were selling more rooms than we’ve ever sold before, and even better news, we were selling them at a higher rate than we had ever sold them before. That good news did not stop as we moved into 2014.”

Brown noted some other potential highlights for the future. For instance, in 2013, the U.S. captured 3% of the 85 million outbound Chinese travelers. “With initiatives that were created in 2010 with Brand USA, which their mission is to do nothing but increase international travelers to the United States, the ability to grow this demand is real,” she said.

During the opening session, Deloitte LLP’s Guy Langford informed attendees of some results the company found from a survey it ran of approximately 3,000 guests who travel more than 26 nights a year. Langford noted that Millennials are not loyal early on, but once a loyalty is established, they will go out of their way to stay at their preferred brand. When traveling on business, they’re willing to spend $41 more and travel an extra 15 minutes, and for leisure trips, they’ll spend $35 more and travel an extra 12 minutes. “Once you get the customer, they’re incredibly loyal,” he said. The key, he noted, is to target them with incentives that will resonate. “You have to segment your customer base and understand they have different expectations,” he said. “Millennials like swift gratification and customization.”