High marks for amenities and meetings facilities edged Four Seasons Hotels and Resorts to the top of the U.S. Hotel Chain Survey's deluxe tier, as brands strategize to show buyers that luxury is not incompatible with necessary cost-cutting.
(Editor's note: Download a PDF of the full 2009 U.S. Hotel Chain Survey here, including all charts, rankings and analysis.)Four Seasons bested Ritz-Carlton, with which it tied for top deluxe tier honors in 2008, by just three-hundredths of a point. The two brands, which together have dominated the top positions of the tier for the last decade, both significantly improved their scores compared with 2007 and maintained a healthy premium over other competitors in the category.
Susan Helstab, Four Seasons' executive vice president of marketing, said such service innovations as one-hour pressing, around-the-clock fitness and dining options and complimentary services for business travelers like overnight shoe shines and newspaper deliveries propelled the brand to the top of the survey.
"Four Seasons began as the first 24/7 hotel for the business traveler, and we continue to focus on that today," Helstab said.
Ritz-Carlton, part of the Marriott International family, received top marks from buyers for its corporate rate programs, food, staff and appearance of its hotels, all of which have been areas of focus for the brand in recent years, vice president of sales Chris Gabaldon said. The brand has moved away from the formal restaurant dining rooms traditionally associated with luxury hotels in favor of more relaxed eateries often anchored by celebrity chefs, as with Dean Fearing's restaurant at its Dallas location, he said.
Newer Ritz-Carltons, such as those in Westchester and Battery Park in New York, have been designed with a more contemporary style, and the brand has worked to adapt service to the individual traveler.
"Ritz-Carlton's foundation was built on outstanding service delivered consistently from hotel to hotel," Gabaldon said. "We don't want to depart from that quality of service, but we did want to adapt how that service is delivered to the customer."
Hilton's Waldorf-Astoria Collection brand, launched just three years ago to build upon the iconic status of the famous New York hotel, for the first time garnered enough usage among travel buyers to be included in the survey and made a strong debut in third place. Tom Botts, a partner with strategic advisory firm Hudson Crossing, said Hilton's global sales force has helped the brand get a quick foothold with travel buyers.
Buyers gave top marks to Starwood Hotels & Resorts' Luxury Collection, for arranging group travel and its commission payment systems, placing the brand fourth overall.
The luxury tier, however, is expected to take an especially hard hit amid the travel slowdown. Bjorn Hanson, an associate professor at New York University's Tisch Center, said luxury demand should decrease by about 6 percent this year.
Part of this comes from the so-called "AIG effect," coined after the insurance giant was roundly criticized for hosting a resort incentive trip within a week of receiving federal bailout money. With the top-rated brands in the category often considered synonymous with opulence, some large companies are reluctant to attach their travel and events to them.
"Many people are avoiding these two brands just because of the potential stigma, even if they can get a good rate," Hudson Crossing's Botts said. "It's perception. These brands have never been associated as a value play."
Ritz-Carlton's Gabaldon said the brand will never win on price, but the strategy in the current economy is to focus on the value that comes with luxury stays. Though the properties offer spas and other amenities associated with indulgence, the brand in negotiations focuses more on the need for top executives to have access to services ensuring that their trips are efficient, he said.
"It's unfortunate that the rhetoric around luxury from Washington these days is putting so much pressure on our best customers," Gabaldon said. "We don't speak of luxury. We speak of service, trust, privacy, quality and consistency."
Luxury demand also will be hit because the businesses that have the highest propensity for using the properties, particularly financial institutions, are suffering, NYU's Hanson said. Additionally, the dollar has strengthened significantly against foreign currencies in the past year, and that combined with the global nature of the recession will significantly cut international inbound travel to luxury properties, he said.
"Those were really desirable guests," Hanson said. "They spent more and stayed longer."
Compounding the demand drop is the unusually large amount of supply growth forecast for the tier in 2009. The long-term supply growth rate for the tier is about 2 percent, but supply growth is expected to be more than 5 percent this year, Hanson said.
The top-rated brands in the tier are part of that robust pipeline. Four Seasons opened nine new properties in the past 12 months—including properties in St. Louis, Mumbai, Istanbul and Seattle—and will open properties in Beirut and Vail this year with more than 40 properties in the pipeline for 2010 and beyond, Helstab said.
Ritz-Carlton this year plans to open six properties, including hotels in Shenzhen, China; Dubai; and Charlotte, N.C. In 2010, openings are scheduled for Los Angeles, Toronto, Hong Kong and Shanghai, and it plans to open five more in 2011.
"There could be some delays on the way without knowing what the next months will hold, but we have a strong group of owners and developers," Gabaldon said. "From a development standpoint, all of our projects except one resort in the Caribbean are on schedule."