Thursday, January 15, 2009

Calls to keep hotel prices from falling

Hospitality Association chief executive Bruce Robertson issued a clarion call back in November for operators not to flinch by reducing tariff during times of economic adversity (see our post HERE).

The New Zealand Hotel Council and Tourism Queenstown chime in with a simalar message in the article below.

All accommodation operators in Queenstown are feeling the pain as hotels and apartments dump distressed stock on dwindling visitor numbers.

Otago Daily Times

By James Beech
14 Jan 2009

Destination Queenstown and Lakes District members of the New Zealand Hotel Council have backed the Hospitality Association of New Zealand's calls for operators not to slash prices in the wake of a decline in room occupancies.

Destination Queenstown said occupancy levels were down 10% to 15% from last year, based on unofficial feedback from DQ members.

Levels varied between types of product and accommodation provider.

However, occupancy after the traditional summer peak season was of equal, if not more, concern to operators, acting chief executive Graham Budd said.

He said Destination Queenstown would agree with Hospitality Association chief executive Bruce Robertson when he urged the industry "not to panic, to keep calm, and to resist the urge to discount prices".

Mr Budd said price wars were good for holidaymakers but not for operators' yields.

"Undercutting would lower price points and drag the industry down to a new lower benchmark in the mind of the consumer.

"It would be extremely hard to increase prices once economic times improve."

There is six-week lag on official data from commercial accommodation monitor surveys, via the Ministry of Tourism.

In the meantime, Mr Budd said DQ relied on anecdotal evidence but feedback had been minimal so far, "because even if it's quiet, it's the busy time of year".

Hotel Council regional chairwoman Victoria Shaw said its 17 members in Queenstown and Wanaka would meet again in February after the festive peak.

Christmas and New Year bookings were on par with last year and were "nothing to panic about", she said.

"I think there's been a lot of last-minute bookings that have filled in the gaps from all of our usual markets.

"At this stage, forward bookings aren't as strong as what they usually would be, but the whole booking pattern has changed over the past few months [and] I don't think we can predict what will happen."

Ms Shaw said visitors had held off booking holidays until they could see what effect the economic downturn would have on them, but people were at that stage now and holidays were still wanted.

Airlines were offering good deals and the Internet enabled tourists to shop around and make instant decisions.

"When the economy recovers and you want to put your room rates up, it's going to be harder because people will have a perception of the value of the rooms.

"We definitely need to hold our rates and if people are considering cutting costs, they need to be careful how they do that. We need to maintain the standards of service in Queenstown.

"That's what we've built our reputation on."

Mr Robertson said declines in occupancy rates meant many in the sector were increasingly concerned about managing the quieter April-to-winter period and beyond.

Encouraging domestic tourists to explore the country was one way to alleviate pressure on the tourism industry, he said.

However, while international flights and visitor figures were up, Queenstown Airport Corporation reported domestic passenger numbers were down slightly to 312,733, a 2.7% decrease despite a 3.7% increase in flights, over the last six months of 2008 compared to the same period in 2007.

Source: Click HERE

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