Industry NewsPositive Gains

Positive Gains

When it comes to economic rebound, much is being made about the leading role luxury hotels have taken in raising rate and how group business has contributed to increasing occupancy. But, what about the little guy? How are limited-service hotels, which get a bulk of their business from transient travelers and highway drivers, faring in the recovery?

For the answer, we went straight to the horse’s mouth and talked to two heads of leading limited-service brands, Roger Bloss of Vantage Hospitality, owner Americas Best Value Inns, and Jim Amorosia, CEO of Accor North America, owner of the Motel 6 and Studio 6 brands.

So far in 2012, both men see things looking up, especially compared to last year, for their companies. “Last year we were looking at ways to drive occupancy,” Bloss says. “This year, we’ve already seen occupancy up about 15 percent and rate up about 10 percent. So with those types of early indications, we’re obviously positive.”

“If we back up to 2011, which is when we really started to see the recovery commence, we saw a revenue increase of 4.3 percent like for like in 2011 over 2010,” Amorosia says. “We were pleased with the growth and it accelerated as the year progressed. It has continued very strongly in 2012 as well, and we’re also starting to see rate come back as well.”

Amorosia says last summer’s surprising surge in business served as a catalyst for the rate increases. “We were able to stretch our seasonal prices a little bit more than historically,” he says. “That allowed us to get a better bump into the fourth quarter and into the first quarter of this year. What that’s telling us is that the demand is still out there, and with the very limited supply coming on board, especially in the limited-service market, there is a push on the pricing.”

“We’re already seeing booking up and rates going up so we think limited-service hotels are able to push their rate without sacrificing their occupancy,” Bloss says.

While all indications are that things are looking up for limited service, this year will bring its share of challenges. For starters, the hefty prices for gas that got an early starting in rising this year may have limited-service owners thinking about gas card promotions once again. Bloss admits it’s been talked about at his company, but at this point they’ve decided against it. “We still really believe that with the pent-up demand that people will still travel this summer,” he says, “but I do think they’ll be looking for value.”

And limited-service hotels are poised to fill that value proposition. “We’re really pushing our frequent traveler programs because they bring so much added value,” Bloss says.

That value proposition, which has been important for many consumers for the last four or five years, promises to continue to open doors for new customers. “We’ve added a better mix of business travelers,” Amorosia says. “About three years ago we put a heavy emphasis on increasing business-to-business contractual sales and each year we’ve increased our business to where in 2012 we’re projecting that it will be 15 to 20 percent of the total Motel 6 business.”
While the economy continues to recover, limited-service hotels are seeing positive growth and opening their doors to more guests and more business.