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A Better Season

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  • | 12:20 p.m. December 3, 2010
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Industry. Hospitality
Trend. Shortened booking window.
Key. A better winter tourism season could set the stage for room-rate increases next year.

If October and November are any indication, hoteliers on the Gulf Coast say the winter tourism season could be an improvement over the previous year's dreadful occupancies.

Problem is, they can't say for sure.

That's because individuals and groups are booking hotels so last-minute that it's almost impossible for hoteliers to gauge demand more than 30 days out.

“You can't look out six months anymore,” says Jason Parsons, general manager of the Naples Beach Hotel & Golf Club. “Our big pieces of business we're bidding now are February and March.”

Individuals and groups who used to book rooms months ahead are now making reservations with just weeks to spare. That forces hoteliers to drop room rates to boost occupancies, creating a snowball effect of falling rates across the region from Tampa to Naples.

“Everybody has dropped their rates, so unless you've got a great location, you're going to have a hard time competing,” says Dennis Reed, senior vice president for the Southeast region for The Plasencia Group in Tampa.

While the news of the BP oil spill has faded from the headlines, its longer-term impact remains unclear. “I know a lot of people picked up business on the east coast, all the way up to Tybee Island and Savannah,” says Lee Weeks, the CEO of Coral Hospitality in Naples.

Also unclear is the impact of the blast of cold weather that sent tourists scurrying off the Gulf Coast beaches last winter. “We all got hurt with that cold snap,” says David Teitelbaum, president of Ana Maria Island Resorts in Bradenton Beach.

The economy continues to struggle too, particularly in the Midwest feeder markets where winter snowstorms reliably send thousands fleeing to Florida in the winter. High unemployment and the manufacturing decline in the Rust Belt means the Gulf Coast will likely fare worse than the east coast, which attracts tourists from better-off states in the Northeast.

“It's not going to be a return to normal by any means,” says Reed.

Tentative signs

Because of last-minute bookings, hoteliers' outlook and planning for the winter season are based more on anecdotes than solid data. “It's always been an art as opposed to a science,” says George Glover, CEO of BayStar Hotel Group in Tampa. “It's even more pop-art than anything.”

But there is some good news on the weather front because meteorologists forecast Florida will experience milder temperatures this winter. “We're hoping people have short memories,” says Tony Lapi, president and CEO of the Tween Waters Inn on Captiva and chairman-elect of Visit Florida, the state's tourism arm.

The “La Niña” weather phenomenon could last through the spring, bringing above-average temperatures to the Southeast U.S., according to the National Weather Service Climate Prediction Center. What's more, the weather pattern could boost snowfall this winter in the Ohio Valley.

Adding to the optimism is that October and November turned out to be better months than many hoteliers expected. “The book we had for reservations was less than the year before. However, the actual weeks we are getting are higher,” says Teitelbaum.

Airport traffic rose too as airlines boosted service. For example, passenger traffic at Southwest Florida International Airport in Fort Myers rose 13% in October compared with the same month a year ago.

Some suggest that the boost in marketing to counter the BP oil spill resulted in higher occupancies in the fall and that bodes well for the winter if it can be sustained. “The Gulf Coast of Florida is just starting to be discovered,” says Jack Damioli, general manager of the Gasparilla Inn on Boca Grande.

Damioli, the former general manager of the Greenbrier resort in West Virginia, increased the marketing of the Gasparilla Inn since he moved to Boca Grande in 2006. The effort resulted in positive press in large-circulation magazines ranging from Southern Living to Travel and Leisure and Conde Nast. This season's bookings are up 10% with stable rates, Damioli says.

The BP oil spill might have soiled Florida's perception more with Europeans than North American tourists, though the memories of the disaster appear to be fading everywhere. “We figure it's done,” says Lapi. “We're trying to downplay it because it's really not a factor anymore.”

What's more, the U.S. dollar's weakness continues to make Florida an attractive destination for Europeans and Canadians. “Our dollar is still pretty stinky,” Lapi says. “In that sense, we could have a good season.”

The corporate-group business that disappeared after the financial meltdown in late 2008 has started to come back, hoteliers report. “We've seen a rebound to occupancy levels to pre-economic-downturn,” says Bruce Seigel, director of sales and marketing for Ritz-Carlton Resorts of Naples.

Fortune 500 companies began to book corporate meetings again in the summer of 2009, Seigel says. “We saw the recommitment to five principles: recognition, reward, incentives, networking and education. Those needed to be reestablished,” he says.

It won't be long until rates follow rising occupancies because Seigel says his hotels have seen increased group bookings into 2011 and 2012. “There will be a return to pricing power and we've begun to see that,” Seigel says.

Shorter stays, smaller windows

While Fortune 500 companies are sending employees out of the office for travel, they're not spending as much time on the road and they're being careful about expenses. Seigel cautions that companies are spending less on frills such as golf and fancy meals.

Economic and geopolitical uncertainties keep individuals and groups from making long-term hotel bookings. That creates headaches for hoteliers who try to gauge appropriate staff levels. “The biggest variables are wait staff and housekeeping,” says Fred Hirschovits, president of Twenty/Twenty Worlwide Hospitality in Naples.

Last-minute bookings also impact rates as hoteliers sometimes panic when their hotels aren't as full as they hope. “People are afraid to raise rates,” Hirschovits says. “But this season will give us an opportunity to make adjustments.”

Higher occupancies, however, won't guarantee higher rates. “It'll be another tough season,” says Reed. “There's not enough demand for people to raise their rates.”

There's intense competition among hoteliers bidding for last-minute business. “From an average-rate standpoint, they're going to be behind the times for another year and probably two years,” says Glover.

Still, hoteliers will often include credits for food and beverage before they'll lower rates. “What kind of lagniappe can you throw into the mix?” Glover says.

“You can't throw the panic button,” says Lapi.


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