US upscale hotel market: how to rise back up?

The upscale hotel segment in the United States had perhaps never traversed such a major crisis. From the upscale segment to luxury properties, on East Coast and West Coast alike, all 4-5* American hotels have been pulled under by the “subprime” whirlpool and have not yet risen back up. The unease was latent already in 2007, but the process has speeded up since the collapse of Lehman Brothers. The financial crisis has led to budgetary restrictions for individuals and corporations alike, clearly penalizing the occupancy rates at properties. This trend has brought about the happiness of the midscale range which has proved to be the most resistant in today's climate. To make matters worse for the local stars, the AIG* syndrome and the quest for a low profile compounded ambient wariness by discouraging ostentatious luxury.“We continue seeing opportunities for our luxury and upperupscale brands at key destinations that are both leisure and business. For the current year alone, we opened hotels in Atlanta, Dallas, Hollywood, Miami, Philadelphia and Washington D.C. These markets all represent strong potentiel for Starwood because they are hubs with resistant business sectors, solid infrastructures and international access,” explains Roeland Vos, the president of Starwood Hotels EMEA. Good government means already foreseeing the way out of the crisis.Faced with this stagnation, 4 and 5* hoteliers had no other choice than to very clearly revise their room rates. The last trimester 2008 proved particularly difficult. Starwood, with its supply positioned almost exclusively on this segment, saw its room revenue drop by 13.2%. At the heart of the IHG's North America division, InterContinental fell by nearly 12%. The drop for Crowne Plaza was close to 9%.Unfortunately, a year after the deflagration, the market is still just as depressed. In the second quarter 2009, Marriott posted a drop in its...