Airlines and hotels: the travails of accommodating a recovery

Market conditions are turning for the travel and hospitality industry. More people are leaving home behind for a while, and they are again willing to open their wallets to do so. Especially in the highly coveted business travel sector, seats are filling and rooms are being occupied. So, it would stand to reason that airlines and hotels would move to address the increase in demand. Unfortunately, accommodating growth can be risky in these industries. Every step must be made carefully and deliberately, with a plan for taking existing demand to a higher level.

Think about your local grocery store. If cans of corn start to sell aggressively, the store can examine the trend and order more for the following week. It may have to allocate a bit of extra shelf space, perhaps at the expense of canned peas The risk isn’t that high, though, because demand can be handled in smaller increments.

The core product isn’t as flexible in the travel and hospitality business. As people look to book more rooms or flights, a hotel or airline can’t simply add a bed or a seat. Airlines can add routes (or restore those that have been cut), but that creates a new problem.
Assume that demand for a particular route has grown from the norm to the point that another one third of a plane’s seats would be filled. New revenue is coming in the door, but cash is also going out to cover the cost of operating the flights. To make this growth profitable, the airline may have to fill more of the seats on that new flight. To accommodate demand, essentially, the airline will have to create even more.

This is the reasoning behind United Continental CEO Jeff Smisek’s remark on an earnings call recently, as reported by the Associated Press, “We will not grow for growth’s sake, but only if we can maximize our profitability by doing so.”

For the hospitality industry, the challenge can be even greater. A major chain may see an opportunity to take on more guests by adding another property, but this doesn’t happen overnight. It takes time, effort and capital to get a hotel up and operational, especially in a major city. During the time it takes to plan and execute an expansion, market conditions can change substantially, as the hospitality industry learned with the credit crisis of 2008. Real estate and financial market conditions can have a magnified impact on the hotel business, and the underlying drivers move far more quickly than those supporting increases in rooms capacity.

Projects already in the works in 2008 left the industry with more supply than it needed in 2009 and 2010, and demand for rooms, according to travel industry research firm PhoCusWright, isn’t expected to return to 2007 levels until next year. This means that net growth won’t begin until 2008.

Think about it: plans that may have begun to be executed in 2007 won’t deliver results for at least four years, maybe even five.

Managing supply and demand in the travel industry is, to say the least, a tricky business. Traveler purse strings are starting to ease, making life much rosier for airline and hotel company income statements. Taking advantage of this opportunity, however, is easier in theory than in practice. This year and next, we’ll see how the hotels and air carriers manage the perils of potential.

[photo by disparkys via Flickr]

Top four strangest hotel requests

What do you ask for when you visit a hotel? I tend to like a bathrobe that has all its belt-loops intact and a desk that is as far away from the bed as possible. Also, I’m a stickler for service. Well, apparently my needs are pretty conventional. Best Western just put out a list of the most unusual demands made by guests, according to the Sydney Morning Herald, showing just how weird people can be.

You may have a vivid imagination, with an uncanny ability to sense the absurd and see it crystallize in your mind. Well, I’m here to tell you that you’re an amateur. You have to be pretty unusual even to think of the unique stuff people have requested from hotels.

Take a look below at the four strangest hotel requests out there. 1. Spiriting and healing pets: Reiki for animals … really? Who gets an idea like this?

2. I like to watch: One group wanted a chaperone for sex addicts, although, I think the other word for this is “spectator.”

3. The blues: There was a party that wanted a meal comprised only of blue food. I’m wondering if it was a technicality to get kids who objected to “greens” to eat their vegetables.

4. A desire to labor: A lawnmower convention organizer asked if his guests could cut the grass on the grounds, in order to demonstrate how the products work.

According to the Sydney Morning Herald:

“We always try to accommodate our guests’ requirements – no matter how off the wall they may be,” said Tim Wade, head of marketing at Best Western. Although he admitted that a visit from members of The Tall Person’s Club of Great Britain had to be put on hold after the hotel in question were unable to locate enough seven-foot beds.

So, how strange are you? Leave a comment and let us know the weirdest thing you’ve craved – or even asked for – at a hotel.

[photo by .guilty via Flickr]

iheart the Roger Smith Hotel: art salon arrives in Manhattan

I would not have been surprised to find the likes of Denis Diderot and Jean-Jacques Rousseau sitting across from me Friday night. Reviving a concept only too scarce since the end of the eighteenth century, the Roger Smith Hotel was host to a dinner that centered on the exchange of ideas and the appreciation of art. The creators themselves were in attendance, flanked by friends, admirers and even the lowly folks who sit on the sidelines and chronicle these affairs. In midtown Manhattan, known for flocks of tourists eager to consume the same eye-candy as the previous wave, it was a rare reprieve from the commodity norm.

The arts are important to the Roger Smith Hotel, evident from the Lexington Avenue sidewalk in front of the property. A look inside THE LAB, home to installation and performance art, shows what can be done with a converted storefront to provide intellectual depth and enrichment in a world characterized by the swift progress of passers by, not unlike the 25CPW studio on the Upper West Side and other non-traditional gallery spaces. As you move farther up the street and turn to the main entrance, the interactive display immediately to your right drives the point home. In fact, it was the reason I was at the hotel in the first place.

The inside wall of the Roger Smith Hotel’s entrance changes regularly based on the whim and fancy of anybody who chooses to walk by. Framed magnetic pop art images from the “iheart” project are stacked on the floor when not stuck to the wall, and staff, guests and just about anyone else can pick them up and rearrange them in an attempt to make a point or express a feeling. It’s fun, hands on and expressive. You become a part of the exhibition.

I encountered the iheart project for the first time at New York’s Affordable Art Fair a couple of weeks ago. Entering the ArtWeLove booth, I was struck immediately by the display, which consumed a generous amount of wall space. After talking for a bit with company founder Laurence Lafforgue, I was hooked, and didn’t hesitate to accept her invitation to the iheart dinner at the Roger Smith. Not knowing what to expect, I showed up early (unusual for me) and grabbed a glass of wine and a cigar at the hotel’s rooftop bar with my friend and fellow blogger Laurie DePrete, who introduced me to the Affordable Art Fair in the first place, effectively making the experience to come possible.

The crip autumn air and accompanying glass of white wine provided the perfect frame of mind for the iheart dinner: it was impossible to avoid clarity, openness and a sense of excitement after viewing the city below with the lubricating effects of the vino, of course.

The room had filled in my absence, and upon first inspection, it was evident that a varied crowd would make for a lively and insightful evening. Salient eccentricity made the artists easy to identify, and clusters of conversation indicated which guests were present in support of the creators. Interestingly, the artists were not holding court in these disparate collections of discourse. Rather, their palpable humility made interpretation the main event, as observations tended to trump explanations. Underscoring this dynamic was a video projected on a screen at the front of the room, showing the variations on the front door display that had already come to life … and departed. Punctuating the conversation were pauses to look up, yielding the knowing looks of some and the expressions of awe by others.

With iheart being the guiding theme of the dinner, it followed naturally that the artists in attendance were responsible for variations on the original, having put their own imprimaturs on this spirited concept. In a sense, it was a vast, asynchronous collaboration, involving unique and divergent perspectives that nonetheless came together into a cohesive whole. An international effort representing three continents, a bevy of accents and broad range of experiences came together seamlessly, demonstrating that a shared mission can translate to a spectacular outcome, even without strict and rigid control.

As the meal was served and the table filled with plates, wine glasses and the spoken word shooting to and fro, with the original conversation groups mixing into new pockets of insight on art and art market issues. It was impossible not to share ideas, even while chomping on the pasta served by the hotel, given the diversity sitting elbow-to-elbow. I was particularly excited to speak with Kosuke Fujitaka, co-founder of NY Art Beat, which has an iPhone app listing in granular detail the city’s many (and perhaps otherwise unknown) art exhibitions.

The evening drew to a close, and I again retired to the rooftop bar to smoke a Guillermo Leon Signature cigar, sip my final glass of wine and watch the staff collect the blankets from the chairs (a nice touch for combating the late-night chill) as they wound down, too. The direct exchange of ideas was ending, though it would doubtless continue through the Roger Smith’s interactive exhibition, the online presence of the iheart project and, of course, the collective and separate efforts of the artists and onlookers.

Doubtless, Diderot and Rousseau would have been proud. If slightly divergent from their experiences, the spirit was certainly present, contrasting wildly with the relative mayhem of the streets 16 floors below. ArtWeLove, iheart and the Roger Smith created an experience nearly absent from today’s social lexicon, reviving the art of thinking for its own sake.

[photos by Laurie DePrete]

Taxes could make discounted hotels more expensive

If your next hotel stay is more expensive than you expected, blame the government. State and local governments, still reeling from the recession, are looking for any source of revenue they can grab. And, they’re next target seems to be online travel agencies.

Online booking sites, such as Expedia and Orbitz, negotiate a rate with hotels for available inventory, market it up a bit and pass it along to the travel-buying public. The business model is pretty straightforward. The problem comes down to which room rate should be used to calculate state and local occupancy taxes. At least 40 lawsuits have been filed over the issue, as local governments have rewritten ordinances to try to add a bit more to the coffers.

There’s a lot at stake, according to a USA Today report. Approximately $1 billion a year is perceived to be lost by state and local governments.

Yet, is it really lost? The online travel agencies are paying the hotels, and according to Andrew Weinstein, spokesman for the Interactive Travel Services Association:

“Occupancy taxes are based on the rate the hotel sets and receives,” he says, “not the profits, fees or commissions of its partners. … The facilitation fees are no more part of the hotel rate than the taxi that takes the guest from the airport or the tip they give the bellhop.”

How do you feel about this issue? Leave a comment to let us know if it’s what the hotel gets or what the occupant pays that should matter for tax purposes.

[photo by Howdy, I’m H. Michael Karshis via Flickr]

Hotels and spas use corporate retreats for sweet financial revenge

It’s hard to tell who wants a business travel rebound: business travelers or the hospitality companies that cater to them. Routine road warrior jaunts suck, but there are executive retreats, training programs and other opportunities that do appeal even to the most jaded of the white collar folks.

So, the hotels are fighting to get business travelers back, according to Business Insider, and they’re getting creative. Luxury properties, including spas, were nailed by the financial crisis and ensuing recession. They have a lot of ground to make up. To do this, they’re coming up with new programs to get the corporate folks to open their wallets. Some of them are pretty bizarre, even retaliatory. Business Insider reports:

Their new approach is luring clients back to their bedrooms for “must-have” bonding and training sessions that put execs in compromising positions.

Retreats that specialize in corporate getaways have been cooking up programs that encourage extremely awkward and potentially dangerous bonding activities, like fake-trying to kill each other.

Call it the, “You’re putting us out of business? We’re going to push you off tall objects, hike mountains naked with 50 pounds on your back, try to kill each other and make you beg for more” – strategy.

Even with these implications, the response from the business world still seems to be a resounding, “Thank you, sir! May I have another!”

Bank of America, Google and Toyota are among the companies that have gotten on board with these programs. Some of them do get pretty weird, such as:

The icing on the cake is The Death Race, where co-workers sit for 45 minutes in an ice-broken pond, gulp a gallon of milk (even if you’re lactose intolerant), crawl under barbed wire and sprint up a greased-up ramp.

Don’t you remember when the corporate people were just interested in making money? It was all so much easier back then …

[photo by Boss Tweed via Flickr]