BTN's 2011 U.S. Hotel Chain Survey - Business Travel News

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BTN's 2011 U.S. Hotel Chain Survey

February 25, 2011 - 04:25 PM ET

By Michael B. Baker

Hotels in 2010 rebounded in more than just occupancy, according to the results of Business Travel News' 2011 U.S. Hotel Chain Survey, an examination of business travel buyers' opinions on the hotel brands they most frequently use in their travel programs.

Compared with last year's survey, the top satisfaction levels increased in the upper upscale, upscale and select service tiers as well as for most individual brands within those tiers. Top satisfaction levels declined, though only slightly, in the luxury and midprice tiers.

Download a PDF of the full 2011 U.S. Hotel Chain Survey here, including all results, rankings and analysis. 

Of the multibrand hotel companies, InterContinental Hotels Group this year fared the best, having the top brand in three tiers and the second-place brands in two tiers. Marriott International also had a strong performance, with top brands in two tiers and four other brands falling in the top three of their tiers. Starwood Hotels & Resorts' Four Points by Sheraton for the first time since 2003 earned a top spot in the midprice tier, and Hilton Worldwide also had three brands score in the top ends of their tiers.

Business Travel News this year slightly changed the tier structure for the survey, splitting the formerly united upscale and select-service tiers into their own individual tiers. Also, for the first time in three years, several extended-stay hotel brands generated enough usage to be included in the survey results.

METHODOLOGY 

Business Travel News' U.S. Hotel Chain Survey annually measures corporate travel buyer opinions of the lodging brands they use. BTN emailed corporate readers responsible for hotel-buying decisions, asking them to rate hotels, arranged by tier, with which they did business in the past year. Equation Research tabulated ratings from 519 respondents.

The survey bases hotel tier division on price point data provided by STR and industry knowledge. Buyers rated hotels in each segment on as many as 13 attributes, each on an ascending numerical scale from one to five. The highest average score for each attribute is listed in boldface.

BTN reported results only for hotel tiers and chains with significant respondent usage.

DELUXE 

Four Seasons Hotels and Resorts reclaimed its spot atop the rebounding deluxe tier in the 2011 U.S. Hotel Chain survey as Mandarin Oriental displaced Ritz-Carlton from one of the top two spots for the first time in more than a decade.

After facing massive declines in 2009 in revenue per available room and rates, the U.S. luxury tier appears to be leading the hotel industry in its recovery, according to STR. It was the only tier in 2010 to grow average daily rate, up 1.7 percent from 2009 levels. Occupancy in the tier last year jumped by 7.1 percent, a growth rate second only to the upscale tier.

Luxury hoteliers said a big source of their 2009 woes—a perception problem that became known as the "AIG effect," so named for a widely criticized incentive trip the insurance giant held at a St. Regis property shortly after receiving federal bailout money—is beginning to fade. Frits van Paasschen, president and CEO of St. Regis parent company Starwood Hotels and Resorts Worldwide, said at January's Americas Lodging and Investment Summit that improved December group bookings numbers was one sign of that.

"In Washington, the Obama administration is taking a different stance towards business travel, realizing it is a great driver of employment," van Paasschen said. "Those days of paranoia are hopefully behind us."

Ritz-Carlton chief sales and marketing officer Chris Gabaldon, whose brand was top-rated by buyers in resort meetings facilities, said as luxury meetings return, they're doing so with a corporate mindset that they're not about opulence, but results.

"We may not see over-the-top events, but companies need to recognize and reward employees, conduct strategy sessions and get back to making their business work, and meetings and events are very much a part of that," Gabaldon said. "What they look for us to do is create value in ways that's beyond functionality, in creating a meeting environment that helps them achieve their goals."

For example, luxury meeting planners, when considering food and beverage, are looking not necessarily for sumptuous, indulgent meals but rather healthy, energy-boosting offerings that aid the progress of the meeting, he said.

Fairmont Hotels & Resorts earned top scores from buyers both in arranging group travel and its facilities for non-resort meetings. The company in recent years has put a heavy focus on planning environmentally friendly meetings, including local-food menus, "disposable-free" amenity offerings and such in-room green amenities as recycling bins, energy-efficient lighting and water-saving showers and toilets.

Besides being the top-rated brand in 2011, Four Seasons also earned top ratings from buyers for its in-room amenities and food quality. Buyers gave second-highest overall marks to Mandarin Oriental, which was fifth in the tier in 2010. It also ranked highest in five categories in the tier, more than any other luxury brand: commission payment systems, business center, in-room business amenities, overall price/value relationship and, in a tie with St. Regis, corporate rate programs.

While Mandarin Oriental for years has been known as a top business hotel in the Asia/Pacific region, vice president of sales and marketing Emily Snyder said, it recently has made strides in being recognized as such in the United States. The company deals with more than 90 multinational corporate accounts and also has increased its U.S. footprint with recent openings in Boston and Las Vegas.

While price/value relationship has a different meaning in a tier where four-digit average daily rates are not unusual, Mandarin Oriental's scores likely were boosted by its Business Plus program, in which travelers agree to pay upon booking a small premium for a variety of amenities to be included in the rate, Snyder said.

"What they want are those value-adds: Internet, upgrades, business center access," Snyder said. "This was extremely successful in New York, where we had a $900 average rate."

Although Ritz-Carlton dropped to third from its first-place finish in 2010, buyers still gave it top ratings in four categories. In addition to resort meeting facilities, the brand scored highest for arranging individual travel, the physical appearance of its hotels and its staff.

Ritz-Carlton properties in the years prior to the downturn had invested in renovations that contributed to the physical appearance score, but staff and service is a critical issue to the brand and ranks as the top reason guests choose the brand, Gabaldon said. The company since 2006 has been altering its approach to service, making it more adaptive and personalized rather than following the same service procedures for all guests, he said.

 The company also introduced a rewards program in 2010, focusing on offering experiences as rewards, including adventure travel itineraries and photography expeditions. While many luxury hoteliers view rewards programs as incongruent with luxury guests, Hilton Worldwide global head of luxury and lifestyle brands John Vanderslice said they're gaining in importance, particularly for business travelers.

"The 38-year old hedge fund manager is just as likely to stay at a Conrad hotel on business and then, two days later at a kid's soccer tournament in North Carolina, stay at a Hampton," Vanderslice said. "Recognition is very important."

Looking forward, the deluxe tier appears poised to continue to make gains in 2011. With little luxury supply coming into the United States this year, STR forecasts that the deluxe tier will see the highest rate and RevPAR growth of any segment, increasing 7.4 percent and 8.2 percent, respectively. As such, Homi Vazifdar, managing director of luxury hotel developer Canyon Equity, said the obituaries written for the tier during the dark days of 2009 now have been proven premature.

"We are back," Vazifdar said. "If 2010 was not an aberration, and 2011 is, as a lot of us suspect it will be, a good year and sustains itself, we are out of the woods."

UPPER UPSCALE 

Marriott International's JW Marriott brand squeaked back to the top of the upper upscale tier as InterContinental Hotels Group's Crowne Plaza brand strengthened its dominance of the upscale tier in the 2011 U.S. Hotel Chain Survey.

After dropping it to third place in 2010, buyers this year returned JW Marriott to the top upper upscale position it held from 2007 through 2009. IHG's flagship brand retained its second-place position, followed by Marriott's Renaissance brand, which buyers ranked fifth last year.

The top upper upscale brand of 2010, Starwood Hotels and Resorts Worldwide's Le Meridien, dropped to fifth, though its overall scores actually improved from last year, as did those for most brands in the tier.

The upper upscale tier in the United States saw a significant improvement in occupancy in 2010, up 6.5 percent from 2009, and its overall average occupancy rate of 67.7 percent was higher than any other tier, according to STR. Average rates in the tier, however, changed little, down 0.5 percent compared with 2009 levels.

That is forecast to change this year. STR projects that occupancy at U.S. upper upscale properties in 2011 will increase by 1.8 percent as average daily rate increases by 6.1 percent. Supply growth in the tier is slow, and, at the Americas Lodging Investment Summit in January, Marriott president and COO Arne Sorenson projected "continuous strength in pricing" during the next several years.

JW Marriott ranks at the upper end in pricing among the survey's upper upscale properties—Marriott positions it as an entry-level luxury brand—and the brand earned the top scores in the facilities and service categories. Buyers rated as the tier's best its in-room amenities, an area in which the brand recently has invested, including an overhaul of the brand's bathroom accoutrements, JW Marriott global brand manager Mitzi Gaskins said.

JW Marriott also has invested heavily in employee training, as evidenced by the top scores for its staff, Gaskins said. The brand looks for service aspects that set it apart from other hotels in the tier, such as a wine ambassador program it launched last year, she said.

"We have six to 10 associates within the hotel who go through training and become wine experts," she said. "These are people who are not quite sommelier-level but are very knowledgeable about wine, and we've had a lot of success and good feedback with that."

While development in the upper upscale tier largely has stalled in the United States, JW Marriott has opened several new properties, including those in Chicago, Los Angeles, Miami and San Antonio, adding to the brand's distribution value for travel managers, Gaskins said.

The InterContinental brand, meanwhile, scored best among buyers for its overall value, an honor it shared with Omni Hotels, as well as its business center, business amenities and food quality. IHG vice president of brand management for the Americas Gina LaBarre said the brand—which last year opened the largest new-build property Manhattan has seen in almost a decade—has benefitted from a new concierge program, new meetings packages and IHG's overall strategy.

"A couple of years ago, we took a hard look at our brands and created a global brand management team to focus on offering consistent experiences and developing a deep understanding of our brands and guests," LaBarre said. "It's why we're seeing broad success."

Renaissance, only a hundredth of a point behind InterContinental in overall score, earned top marks from buyers in arranging group travel. Meetings management has been a focus for Renaissance during the past year, Marriott senior director of lifestyle brands Toni Stoeckl said, as the brand has tried to develop distinct offerings.

"It includes accessorizing the tables, partnering with [designer] Jonathan Adler on scent, mood lighting, music and having a really good start for a creative, productive meeting," he said. "When they know you can do the basics right, this is a really compelling differentiator."

Le Meridien earned the top score for corporate rate programs and arranging individual travel.

UPSCALE 

Crowne Plaza, the top upscale brand in 2010, not only further improved its score this year, but also scored the highest in all but one category within the tier. Its highest scores included arranging individual and group travel, its staff, amenities and the physical appearance of the properties.

LaBarre said a number of factors are behind its performance. IHG put a half-billion dollars into renovating Crowne Plaza properties during a three-year period, and as of 2009, half of the brand's properties had been completely renovated, she said.

"Even through the downturn, hotels continued to invest and put money behind the brand," she said.

The brand also continues to benefit from a bedding program introduced in 2004, according to LaBarre, as well as a meetings program that includes such features as a guaranteed response within two hours to a request for proposal, a director who works one-on-one with meeting planners and daily debriefings to help planners manage costs.

Hilton Worldwide's Embassy Suites brand, which ranked second in the tier, spoiled Crowne Plaza's sweep, earning the top score for non-resort meeting facilities.

Embassy Suites global head Jim Holthouser said meetings play a big role for the brand, accounting for about 25 percent of its total room nights sold. One-third of Embassy Suites properties house more than 10,000 square feet of meeting space.

"The bundle offering of Embassy seems to work in our favor: the manager's reception, cooked-to-order breakfast and adding business centers over the last couple of years," Holthouser said. "It's very attractive to the meeting planner."

The brand also has developed a sustainability feature for meeting planners through its website to help answer the environmental questions that are becoming more prevalent in RFPs, he said.

STR projects the upscale tier this year will see a 5.4 percent increase in rates and a 2.2 percent increase in occupancy. The tier in 2010 had the largest occupancy increase of any tier, up 7.3 percent, but its average daily rate still declined 1.6 percent compared with 2009.

MIDPRICE/SELECT SERVICE 

Massive, chainwide investment paid off in the select-service and midprice tiers of the 2011 U.S. Hotel Chain Survey, with the top brand in each recently the subject of billion-dollar renovation initiatives by their parent companies.

Starwood Hotels and Resorts Worldwide's Four Points by Sheraton brand eked out the top score in the select-service tier. Starwood during the past few years has invested more than a billion dollars into the brand, including renovations, new builds and a global growth plan. Through all that, plus removing a few properties that did not meet brand standards, about 80 percent of its portfolio is new or newly updated, said Brian McGuinness, senior vice president of global brand management for Starwood's specialty select brands.

Besides cleaning up the portfolio, investment into Four Points has included enhancing wireless Internet capabilities, improving bedding and adding such food and beverage offerings as a relaunched breakfast program and its Best Brews beer program, he said.

Four Points improved its overall score from last year by more than three-tenths of a point. Against its current competitive set, Four Points would have ranked third last year. Buyers rated Four Points number one in meeting facilities, corporate rate programs, commission payment systems, food quality, staff, in-room business amenities and overall value.

"We've done a lot of work, and now we're seeing it all come together," McGuinness said. "We really have the sort of value proposition with which the customer is starting to resonate and embrace."

Similarly, InterContinental Hotels Group's Holiday Inn and Holiday Inn Express brands earned the top two slots in the midprice tier this year. The two brands ranked fourth and third, respectively, in 2010.

Like Starwood with Four Points, IHG has invested in a billion-dollar relaunch of the Holiday Inn brands, including removal of more than 1,000 underperforming hotels, improving bedding and bath amenities and adding "social hubs" for travelers, said IHG vice president of brand management for the Americas Gina LaBarre. The two brands improved their scores by about two-tenths of a point compared with 2010.

Holiday Inn was the top midprice brand for arranging group travel, meeting facilities, food quality, in-room amenities, business center and in-room business amenities. Holiday Inn Express, meanwhile, was the top brand for corporate rate programs, property physical appearance and overall value.

"We know our owners are seeing improvement in revenue per available room, and we're getting good feedback from our guests, too," LaBarre said. "This wasn't about just slapping new signs on the buildings. We focused on the right things."

Even brands that did not rank at the top of the tier saw improvement following heavy investment. Starwood's upper upscale Sheraton brand, which has undergone several billion dollars' worth of rejuvenation, saw its score jump year over year, as did Carlson's upscale Radisson brand, which early last year began a major overhaul. Carlson CEO Hubert Joly said the brand already has seen $500 million in investment and a commitment from 80 percent of its owners to participate in the project.

Marriott International's Courtyard brand also significantly improved its score and standing compared with 2010, ranking just a hundredth of a point behind Four Points in the select-service tier. While Courtyard has not been subject to as major of an overhaul as Four Points or Holiday Inn, the brand has been undergoing a major lobby renovation project known as "refreshing business," Courtyard brand leader Janis Milham said.

About one-third of Courtyards at the end of last year had implemented the concept of a more open lobby area designed to be conducive to both work and socialization. The brand expects to reach almost two-thirds by the end of 2011.

"We've pulled business center services more front and center and integrated them into the lobby area," Milham said. "Guests are able to connect a lot more, and with the new front desk configuration, service agents and associates can come out more and interact."

Hilton Worldwide's Hilton Garden Inn ranked third in the select-service tier, also earning top marks in arranging individual travel and for the quality of its in-room amenities. Hyatt Hotels Corp.'s Hyatt Place brand ranked fourth and was top-rated for the physical appearance of its properties.

In the midprice tier, last year's top brand, Hilton's Hampton Inn, fell to a fifth-place tie with Choice Hotels' Comfort Inn, though Hampton still rated highest among buyers in arranging individual travel and for its staff.

The midprice tier in 2010 saw the weakest occupancy gain, up 4.8 percent compared with 2009 levels, and its average daily rate dropped by 1.8 percent, according to STR. Its outlook is improved this year, however, with slight increases projected both in rate and occupancy.

EXTENDED STAY 

Buyers participating in the 2011 U.S. Hotel Chain Survey rated InterContinental Hotels Group's Staybridge Suites as the top upscale extended-stay brand in a tight contest with Hilton Worldwide's Homewood Suites. Marriott International's TownePlace Suites, meanwhile, was the top brand among midprice extended-stay properties.

Extended-stay hotels' occupancy and rate began to rebound last year, according to the latest data available from extended-stay research firm The Highland Group. For the first time in a year, hotels in the upscale tier increased rates year over year in the third quarter of 2010, though rates continued to decline in the midprice and economy tiers.

Occupancy during the first nine months of last year climbed to 74.5 percent in the upscale tier, compared with 68.9 percent occupancy during the same period of 2009, the Highland Group reported. In the midprice tier, occupancy during that period increased to 71.2 percent from 62.5 percent year over year.

As extended-stay supply growth continues to dwindle, The Highland Group said that the segment could soon experience record levels of occupancy.

Among travel buyer respondents, Staybridge Suites scored best for arranging individual travel, corporate rate programs, and the overall price/value relationship, and bested Homewood Suites by two-hundredths of a point. The two brands tied in their scores for amenities.

IHG vice president of brand management for the Americas Gina LaBarre said service requires a different approach within extended-stay brands, with the hotels usually operating with a lower headcount and guests staying potentially for weeks at a time.

"The guests need to feel at home and like the ability to be able to get out of their rooms," she said. "Even in areas within F&B, if you provide a community table where people can sit around and talk to each other, it pays off for our guests."

Carla Raynor, vice president of sales and marketing for Homewood Suites, said her brand, to which buyers gave top marks for staff, physical appearance, business centers and commission payment systems, has taken a similar approach. The brand, for example, recently enhanced its food and beverage offerings to expand its evening meal and drinks so that guests would have more time to mingle.

"The main thing is you don't want guests to be lonely," Raynor said. "Even in a spacious suite, there are only so many hours of your favorite TV show you can watch."

LaBarre said Staybridge in recent years took a different approach for its property design, using a model developed by students at the Savannah College of Art and Design. Elements include ottoman cubes for extra seating and storage, a desk hutch for extra workspace and new closets. Hotels began implementing the design last year.

Homewood, meanwhile, is pushing for additional openings in the coming years after passing the 300-property mark, Raynor said. In particular, the brand is looking to add to its presence in Canada and in urban locations, including through deals in which full-service Hilton properties would offer a few floors of extended-stay rooms.

In 2008, the last year in which survey respondents indicated enough usage for extended-stay properties to be included in the results, Homewood Suites ranked as the top brand, and Staybridge Suites was third.

In the midprice tier, TownePlace Suites scored highest in all categories in which buyers were surveyed. InterContinental's Candlewood Suites ranked second, earning its highest marks for its corporate rate program and staff. 

 
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