Are You Ready for the Downturn?
By Brenda Fields Founder, Fields & Company | January 05, 2010
Key markets, world wide have experience unprecedented occupancies, average rates, and RevPAR for over a decade. New York City and London in particular have experienced average occupancies well over 80% for the past several years, driving record average rates and RevPARs.
The immediate outlook remains promising but the future is less bright according to prominent analysts i.e. PricewaterhouseCooper and Smith Travel Research. One school of thought is "If it ain't broke, why fix it?". But we know that the hotel industry is driven by various economic factors that create many ups and down. The bad times don't last forever and the good times don't last forever, either. So what better time to address any weaknesses in the organization, flaws in the system, or product deficiencies, than when occupancies are strong and the outlook is favorable?
The return on investment on ensuring high standards in all areas is far greater than the cost of a major upgrade and marketing expenses to bring customers back after their bad experiences in your property.
This article will address the benefit of early prevention and will identify areas to evaluate in order to ensure that your property is well positioned for any downturn so that it will remain profitable and vibrant.
Continuous periods of high occupancy create lots of wear and tear on a property and taking rooms out of inventory for maintenance and deep cleaning is most likely not an option to most owners or managers. During these feast periods, guests will pay the going rates just to have a room and will accept it in almost any condition rather than forgo the business trip or family holiday. But, once occupancies start to fall the tide will turn and hotels will experience a "Buyer's Market". Those properties that had noisy air conditioners, stained carpets, or slow shower drains, will find themselves eventually making the investment to be competitive in the new business environment so why wait when we all know that "A stitch in time saves nine".? A minimal investment now and minimal loss of revenues will more than be made up by having a loyal customer base, which will stay with you with the market turns.