Hotels enter ’survival mode’

“Despite early signs of a recovery toward the end of last year, few properties expect to raise prices,” says Scott Booker, vice president of Hotels.com. “This could be another year of significant values for both business and leisure travelers worldwide.”

Hotels “took a beating” during last year’s fourth quarter from corporations demanding rock-bottom room and meeting rates for employees, says Jeff Higley of HotelNewsNow.com, an online trade publication.

McInerney, the president of the hotel trade group, acknowledges the difficulties negotiating in a buyer’s market. But he says the country is slowly coming out of recession, and he sees “a little light at the end of the tunnel.”

Executives of big hotel companies also see positive signs.

Though Marriott International had a 38% revenue decline and a $346 million loss for 2009, CEO J.W. Marriott last month said the fourth quarter’s $106 million profit “exceeded our expectations” and returned the company to profitability.

Marriott said leisure travelers responded to “aggressive marketing campaigns,” and business travel “showed signs of improvement.” The company opened 38,000 rooms, trotted out two new brands, Edition and the Autograph Collection, and reduced debt by nearly $800 million in 2009, he said.

Matt Avril, hotel group president of Starwood Hotels & Resorts, says his company cut its debt by more than $1 billion and opened 83 hotels last year. Starwood has nine brands, including Sheraton, Westin and W Hotels.

Avril says the company, which lost $107 million in the fourth quarter, has seen a rebound in leisure and business travel, and has emerged from the recession “a battle-tested and more mature organization.”

Watkins of Lodging Hospitality says that unlike the economic downturn in the late 1980s, when the industry operated at a loss, it’s expected to turn a profit this year and in 2011.

That’s possible, Watkins says, because the industry today is more disciplined, “dominated by large companies and savvy entrepreneurs” who are “more sophisticated in marketing and operational techniques.”

“Times are tough,” he says, “but many hotel owners are measuring that by the fact they can only order a new Mercedes every other year instead of every year.”