Keeping Resort Spas Busy with Conference Attendees
By Jim Vandevender Chief Marketing Officer, Knowland | July 02, 2017
With the hotel construction pipeline in full swing with more than 190,000 new guest rooms entering the US market over the next eighteen months, the race to fill all of those new rooms will be a continual and ongoing challenge. In addition, the hotels that already exist in those markets (many of which fall into the resort category) are bracing for the increased competition. Marketing plans, sales deployment and market segment strategies are being analyzed and in many instances reconsidered.
The challenge to fill rooms looms large for many hotels and resorts who are tasked by owners and management companies to maintain the pace that many properties have been enjoying with consistently high occupancy and ADR levels. If the rooms are not filled, available spa appointments go unreserved.
For the last few years, high occupancy rates have been driven by high demand. That is a great combination that had been buffered by a slow down in the hotel construction pipeline that started back in 2008 when banks began to hold back lending for hotel construction. That, however, changed several years ago, and the construction boom was – and is- underway. The effect of the construction pipeline is now beginning to show its effect when it comes to hotel and resort occupancy levels, and therefore spas may begin feeling it as well.
In 2016 hotel occupancy rates were almost flat showing little of the usual large increases that have become the norm over the last three years. According to STR, occupancy rates have seen year-over-year increases. These increases were fueled by demand growth’s slightly outweighing supply growth. This is an important point when it comes to consideration of how to fill the room inventory that exists now. Supply rose 1.6% to about 1.8 billion room nights, while demand rose 1.7% to 1.6 billion room nights again according to STR published reports. Room supply was at its highest since 2010. Growth in demand has been, thankfully, outpacing supply growth since 2010. Occupancy levels, as a result, have been rising. The consensus among analysts seems to be, though, an expectation for this to begin changing in 2017 and into 2018.
New room supply, it is predicted, will continue to rise in 2017 and is estimated to be at a rate of about 2 %. Growth in demand will begin to ebb, according to analysts at a rate slightly less at about 1.7%. And looking at historical patterns occupancy rates will in all likelihood be affected with a slight downturn. So, what we expect is for occupancy increases to slow further as supply surpasses demand in terms of growth.
It isn’t all doom and gloom by any means. Certain resort heavy markets are still seeing their numbers grow at a pace faster than non resort markets. For example, a recent article in the Sun Sentinel reported that Florida’s Palm Beach County’s occupancy rate was the highest in the state according to Discover The Palm Beaches, the county’s official tourism marketer. Rich Basen, the senior vice president of marketing and leisure sales was quoted as saying that the destination is seeing noteworthy growth specifically in the groups and meetings market.
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