Low Five-Star Hotel Occupancy Rate Calls for Drastic Measures

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According to Smith Travel Research, the occupancy rates for luxury hotels worldwide dropped to 57% from January-July 2009, compared with an average occupancy rate of 71% for the same period in 2008, a slump that is calling for drastic measures.

With the recession deterring holidaymakers and forcing companies to slash their travel budgets, five-star hotels are implementing drastic measures to try to attract business in a very depressed market. The first measure is usually to offer lower rates, and industry experts expect to see further cuts in September. Although they predict that this will be the last big drop in prices, many hotels are forecasting average daily rates to fall another 1% next year, due to the fact that there is a glut in demand for upscale properties.

The price cuts have, however, some undesirable secondary effects, such as service and amenity cutbacks, including welcome gifts, 24-hour room service, complimentary newspapers, etc., as hotel operators struggle to reduce costs.

Other major brands, such as Starwood, plan to allow some of its properties to reduce their level of service – and number of stars – until the industry begins to recover, whereas Hilton and InterContinental have already cut the ratings for some locations.

Published
27/08/2009