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Special Hospitality Report

International hotel industry study shows successful tactics for surviving an economic downturn

Apr 01, 2010

In association with The Cornell-Nanyang Institute of Hospitality Management and Professor Sherri Kimes, EyeforTravel is proud to announce the release of The Global Hospitality Report - An in-depth analysis of international hotel performance and strategic manual for hoteliers facing challenging economic conditions.

The 12-page global research report includes:

• The very latest international revenue performance figures, trends, and expert analysis

• A comprehensive examination of the most effective RM strategies available to hoteliers to overcome tough economic conditions

• Detailed breakdowns of hotel performance by sector and region

• Pragmatic strategic advice and tactics – lessons learned from the GFC and how to respond to capitalize on the economic recovery

• Statistical analysis, graphs, expert insights and much more

The report is free to download using the following link;


Drops in occupancies, ADR, and RevPAR in 2009 have been widespread in the hotel industry, and the trade press has been filled with articles discussing the downturn and proposing possible tactics for surviving it. Not surprisingly, hotel owners and hotel operators have disagreed on how best to manage during a recession, as owners try to maintain sufficient cash flow to cover their costs, while operators attempt to maintain service levels and long-term brand equity.

One of the keys to success in a down market is to avoid offering across-the-board price cuts and to instead focus on particular market segments and distribution channels. An ADR is just that, an average, and care should be taken to keep your ADR at near or above the average of your competitive set. Research has shown that hotels with an ADR significantly lower than that of their competitive set have an inferior RevPAR performance relative to their competitors. This relationship has been shown to hold true across all hotel market levels. For example, in the luxury market, hotels that have an ADR that is higher than their competitive set have the same or slightly lower occupancies, but have an 8-14 percent higher RevPAR than their competitive set. Conversely, hotels that have a lower ADR than their competitive set have about the same to slightly higher occupancy levels, but report a RevPAR of 3-9 percent lower than their competitive set. Given that knowledge, the challenge for hotel managers is how to compete in a price war.

In a previous study, ways in which hotels can "intelligently" discount were discussed. Essentially the two ways this can be done involve either non-price methods or price-related methods. Non-price methods include competing on the basis of quality, creating strategic partnerships, leveraging your loyalty program, developing additional revenue sources, and developing additional market segments. Price-based methods consist of offering packages, using opaque distribution channels, and offering discounted rates to selected market segments. It’s not that hotels shouldn’t discount — it’s that they should do so in an intelligent and strategic way.

The intent of this study is to determine what tactics hotels used during the economic downturn and to evaluate the performance of these tactics. In addition, the study sought to solicit advice on how to approach future economic downturns so that specific advice could be developed for hoteliers on how to approach the next economic downturn.

Download your free copy of the full report here;

International hotel industry study shows successful tactics for surviving an economic downturn
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