A Tale of Two Segments: Can Budget Hotels Match Upscale RevPAR Gains?
By Dan Denston Executive Director, Mystery Shopping Providers Association - North America | April 14, 2013
No business has been unaffected by the economic downturn of the last few years. Most often, the state of the economy IS the state of the hospitality industry. Though the current recovery of hotel industry, overall, has been stronger than that of most businesses.
PriceWaterhouseCoopers (PwC) says as the US economy inched forward, the travel segment experienced a "robust recovery." In 2011, PwC reports, the hotel industry experienced an 8.2 percent increase in Revenue Per Available Room (RevPAR), just 2 years after it reported a 17 percent dip.
But when you dig deeper, you notice the more upscale properties are faring better and are forecast for a greater RevPAR boost than economy brands. While we won't assume anyone is out of the woods at all, it seems clear that budget hotel brands need to focus on the "blocking and tackling" methods of filling rooms.
Many budget hotel clients of mystery shopping firms are reporting that a constant, almost hyper focus on ensuring that price, service and amenities is helping them compete within their segment, and that customers are beginning to expect an upscale feel at modest prices. Tracking that delivery across an entire chain of hotels seems daunting but once executed – our clients tell us – puts them at a RevPAR advantage compared to neighboring properties and competitor brands.
The State of Recovery
Leading hotel consulting firms are predicting healthy progress for lodging in 2013; PKF Hospitality Research last fall predicted an overall RevPAR boost of 6.2 percent for the year, while PwC tabbed growth at 5.6 percent.