Spring is on the Way and the Outlook is Brighter.

By Matt Costin

That is, if relations between the White House and Capitol Hill about budgets don’t deteriorate and nothing gets worse in the Ukraine, South China Sea, the Arabian Gulf and so on. It was ever thus.

With the US economy on the up, the hotel industry is going along for the ride. Hotel room demand recovered at an accelerating pace in the past year. To such an extent, in fact, that US hotel demand is predicted to outstrip supply within 2 years, in 2015/16. That should help ADR and RevPAR so long as we don’t see further federal government shutdowns (which impacted November 2013 significantly). The improving economy was reflected in a number of lodging industry statistics from the 2013 USA Hotel Guest Survey by BDRC. For most of 2013, occupancy levels, ADR and RevPAR were all higher than last year.

As the global economy gains momentum, overseas demand is helping to fill US hotel rooms too. Easier visa requirements and quicker processing will smooth the path of the inbound traveller. In fact, simplified visa processing has become a surprise competitive edge for destination countries seeking a larger slice of the (often Chinese) overseas visitor market.

A 14% increase in the total volume of domestic business hotel nights spent by Americans was driven by an expansion in participation – an estimated 42 million Americans made a business hotel stay within the US in the previous 12 months, up by 5 million against the previous year. The domestic leisure market grew by a more modest 5% - most of which came from the short break ‘staycation’ market.
The US also grew as an origination market for international business night volume with destinations such as Canada, Mexico, the UK, Germany, China and France being the chief beneficiaries – not to mention Hilton and Marriott – whose lead on international business usage among American travellers was even more pronounced than it was for domestic stays.

Of more than 100 brands tracked in BDRC’s USA Hotel Guest Survey, Hilton remained the No.1 ranked brand on a composite measure of brand health across business and leisure markets. The results saw Hilton regain the ‘Leading Choice’ accolade from Marriott for business stays. Interestingly, however, a difference in opinion across age generation cohorts was apparent: while Marriott actually had a very marginal lead for brand preference among Baby Boomers and Generation X, the extent of Hilton’s lead over Marriott among Generation Y was sufficient to leave it ahead overall. This appeared to be driven by Hilton’s stronger association with the emotional and functional priorities of the Millennial business guest – a group which actually spends more now, on average, for their hotel room, than the older age cohorts.

A leaning towards Hilton or Marriott is just one example of how the difference in preference hierarchies between Generation Y and Baby Boomers plays out. The fact that these two upscale giants are the only two brands which featured in the list of the top 5 most widely preferred brands of both of these age generation groups only serves to underline the challenge for brand owners in optimising appeal across the different segments.

The battle for market leadership was also closely fought in the leisure market, where Hilton recorded improvement across all the key leisure market metrics. Marriott, however, was the most widely used brand for leisure and also the ‘Leading Choice’ – sufficient for it to retain its No. 1 status overall in the leisure market.

With Hampton Inn/Hampton by Hilton, Doubletree by Hilton and Embassy Suites all among the Most Improved brands, it was a positive set of results for the Hilton portfolio of brands. Other notable improvers included Westin, InterContinental and Hyatt, while economy brand La Quinta closed in on the top 10 brands with its second consecutive year of ranking improvement – albeit with much ground still to make up if it is to dislodge Holiday Inn Express from top rank within this tier.

The democratisation of information through social media was very apparent - almost a quarter of American business travellers regularly sought advice on hotel selection decisions using social media. Rather more, though, had sought advice from user review sites or travel blogs - 37% last year. The vast majority of this group, 88%, admitted that their hotel choice has been influenced as a result. This all serves to reinforce the huge shift in information control over the past ten or so years. Corporations can now only indirectly shape the debate amongst purchasers of their products, primarily in the way they deliver their services and are prepared to communicate with their customers and wider market.

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