Hotels spending their way out of the slump

Wednesday, 25 Sep, 2002 0

Starwood and Six Continents claim to have spent, or be spending $1 billion each on improving standards to try to raise occupancy rates. Both have announced initiatives this month to attract guests.

A “you say, we pay” scheme launched this month, means guests who are not happy with Starwood’s Sheraton hotels in the US will receive reimbursements or free hotels stays. Compensation ranges from $15 or 500 loyalty scheme points for slow check-in or missing bath amenities, to a free meal, or hotel stay for slow room service or failed wake up call.

Starwood has invested more than $1 billion over recent years primarily on renovations, improving brand standards, policing hotels that continually failed to provide good service, and disenfranchising hotels that would not or could not meet standards.

It blames inconsistencies at Sheraton hotels on the fact that many of its 200 US properties are franchised. Starwood chairman and chief executive, Barry Sternlicht said: “For many years, travellers felt they could not count on a consistent Sheraton product from one city to the next, which was a huge frustration”.

Six Continents is also hoping to woo guests with fresh initiatives, as part of a $1 billion investment, to be spent by 2004.

The money has and will be spent on aqcuisitions, improving standards, and refurbishing hotels in key cities such as New York, Miami and Madrid. New services include quicker check-in, 24-hour access to the gym or business centre, laptop connections without the need for special cables, and “Little Things Make a Difference”, which offers services such as city guides, and currency packs with spare change and tipping advice.

According to the PKF Consulting and the Hospitality Research Group (HRG), the average U.S. hotel suffered a 19.4% decline in profits in 2001. This was the first decline in hotel profitability since 1991, and the largest single-year drop recorded since 1938.

More recent figures from the UK suggests the outlook isn’t much brighter across the pond. PKF recorded occupancy rates of 82.7% in London in July 2002, down 0.3% from the previous year. Although this figure was an improvement on preceding months, it is the lowest occupancy rate in London, in July for eight years.