The hospitality conference I attended in London was the usual eye opener for me. Being in Europe, the conference had a distinctly European focus with shared information regarding how the ten new members of the European Union are going to affect the economy and business.
Part of the discussion was on the supply and demand of tourism and how the Internet is impacting business. Though information gathered during the International portion of the meeting doesn’t apply to you directly today, it will before long — tourism is becoming more of a global market daily.
The travel statistics on occupancy, room rates, and trends that I gathered are of importance to you so I’ll share those nuggets, translated to the B&B industry.
One area I hadn’t heard discussed before was project attrition; projects that are dropped along the development path. The statistics mirrored my observations of what happens with aspiring innkeepers. Historic attrition for projects:
- pre-planning phase – 75%
- planing phase – 55%
- final phase – 20%
- under construction – 5%
Education is a wonderful tool in helping you avoid a bad situation.
Travelers are looking for an “authentic” experience, a trend I see as great news for the B&B industry — especially the B&B inns that have focused on a carefully define market niche. At the same time, travelers are looking for value for their dollar spent, and because of Internet accessibility they will be comparison shopping. You can expect to see trips being shorter and more frequent, and booking more at the last minute.
These trips will more and more frequently be booked by your guests based on Internet research rather than through a travel agent. There are more single people traveling, fewer kids, more pets, and the average age is increasing. The new acronym for your aging guest is SKI — Spending Kids’ Inheritance. Take note: the SKI generation is more demanding of quality. Because these are active, healthy people, you will also see your guests being interested in activities and wellness products (like spas and gyms).
Overall you will see an increase in demand for quality, luxury goods, convenience, security, and relaxing recreational facilities. Because today’s travelers are looking for value and quality, you will see an increase in your shoulder-season business too.
There continues to be a growth in all sectors but the economy sector. For the B&B industry I translate that to B&Bs with shared baths and minimal guest services will suffer the most. The more a B&B offers in the way of luxury, privacy, choices, and a quality experience, the better it will do.
Occupancy and room rates are increasing, slowly approaching those pre-9/11 numbers. Nationally the occupancy rate is about 60.5% and the average room rate is $85.24. The challenge in reporting such statistics is that there is an inconsistent recovery across the board for markets (urban versus rural versus resort) and segments (luxury to economy). Further, the rising cost of operating expenses like utilities and insurance is making an impact on profit. And the rising interest rates, or the threat of rising rates, will make it harder to get into the business and keep your budget manageable.
However, the economy is in general looking up. Projections for 2004
- Disposable personal income will rise about 3.4%, money you can expect to see spent at your B&B
- Unemployment will drop
- Occupancy rates will increase about 1%
- Average room rates will increase to $86.03, an increase over what they were in 2000
Absorb this information and use it to you advantage, either in your planning or in your operations.