For hotels less down is the new up!

If anyone is looking for the green shoots more than anyone else in this recession it is hoteliers. It is now more than a year since the shock collapse of Lehman Brothers and its aftermath sent hotel occupancies plummeting around the world.

Some hotel sectors have done better than others. Five-star hotels have been challenged as company’s reshaped their corporate travel policies, forcing travelling executives to downgrade to four and even three-star properties. Budget chains have also benefited although perhaps not as much as they would have liked; the problem for them is that the three and four star properties above them have become cheaper and look more appealing than a no-frills room.

It was interesting to see the latest financials from the UK’s biggest hotel chain, Premier Inn, recently.

In its interim management statement t his week, parent company Whitbread announced a turnaround for the budget chain.

The company said it had seen some success in further widening distribution channels. The company had already started doing this – the chain signed a distribution deal with Conferma back in 2007 to distribute its rooms to TMCs. The company also said its business account is doing well – there are 12% more customers this year than last.

So what about the results themselves?

“At Premier Inn, the decline in like for like sales has halved in the last three months. Regional revpar at Premier Inn year to date is now showing a reduction of 7.9% against the hotel market drop of 11.1%. Our commercial action plan is delivering,” said chief executive Alan Parker.
A few months ago, a speaker at a travel conference made the observation that “flat is the new up”, meaning that anyone who could maintain their previous level of business was about as good as could be expected.

Several months on, it is now clear that “less down is the new up”.