by Cheryl-Anne Sturken | December 01, 2005


As the door begins to swing shut on 2005, anticipation is building for what lies ahead. Several developments that occurred over the past year will play a pivotal role in positioning the meetings and events industry in 2006. What will the next 12 months bring? Expect rising costs across the board, a shift in available air lift, new hotel products and emerging destinations.
Here’s a look at how the events of 2005, as played out in a variety of realms affecting planners, will have an impact on the new year.

Higher rates await. Fourth-quarter 2005 wrapped up on a high note for the hotel industry, signaling a strong sellers’ market the strongest since 2000. Average room rates are up 9 percent and occupancy levels are hovering around 70 percent, scaling even higher in the luxury segment. While a number of new full-service convention properties are in the pipeline, they will not begin to materialize before year-end 2007, and they won’t add enough rooms to change the playing field.
    “The industry is on pace for record profit growth in both 2006 and 2007, as the new supply forecasted to come online will not be significant,” says Patrick Ford, president of Portsmouth, N.H.-based Lodging Econometrics. The upshot? Meeting planners can expect to pay higher room rates and fight harder to find the space they need.

Revamps rule. There is a silver lining to 2005’s sellers’ market an unprecedented variety of accommodations and services for 2006. Flush with cash from an uptick in business, hotel chains in 2005 embarked on $4.5 billion in property renovations, particularly in the full-service, upper-level lodging segment, according to New York City-based hospitality consultant PricewaterhouseCoopers. That’s good news for planners, who will get more for their room dollar, including freshened rooms, expanded meeting space and added amenities.
    This infusion of capital will continue. Hilton, for example, currently has 65 hotels undergoing significant renovations. “We have invested an enormous amount of our efforts and resources on returning our brand to its preeminence,” says Bill Brooks, vice president of product development for the Beverly Hills, Calif.-based chain. Indeed, between 2003 and 2006, the brand will have invested $900 million in capital infusion aimed squarely at maintaining brand prominence.

Limited service goes upscale. This segment is not the bare-bones product it was in the 1980s. Today, limited-service properties are angling to lure travelers with good meeting space and amenities such as free breakfast, technology and workout facilities, along with a superior room product. And in a strategic expansion shift, such properties are moving away from suburban markets and into major urban centers. As a sign of the growing strength of this refocused segment, several new brands have debuted.
    In October, White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide launched “aloft,” a brand conceived along the principles of its W hotels (loftlike space, playful design), to be developed in urban markets. Starwood says the first aloft properties will break ground in early 2006 and open in early 2007. Early sites will include Cherry Creek (Colo.), Lexington (Mass.), Tucson (Ariz.) and near to airports in Philadelphia and San Francisco. The goal is to establish 500 aloft hotels worldwide by 2012. 
    Also in October, newly established Atlanta-based NYLO Hotels, founded by John Russell, the former vice chairman of New York City-based Cendant Corp.’s travel division, announced it was ready to bring its product to market. NYLO properties will feature 135 to 158 rooms, with rates ranging from $115 to $135 per night, along with technology-loaded meeting facilities, a 24-hour restaurant, a business center and a library. The company says several sites are under consideration, and it expects to break ground by first-quarter 2006 on one property and have four more under construction during the year. (For more information, see “Lofty Ambitions,” page 16.)
    Meanwhile, Hilton Garden Inn expects to open 45 properties each year from 2006 through 2008. This is a welcome development for planners looking to place meetings in markets with tight space and high room rates, like New York City, where the 367-room Hilton Garden Inn Times Square opened in October, with another set to debut in the city’s Tribeca neighborhood in 2006.
    AmeriSuites, which in January 2005 was acquired by Chicago-based Global Hyatt Corp., was relaunched in October as Hyatt Place, giving the chain a significant stake in the growing upper-scale limited-service segment. Hyatt will spend $175 million in the next year renovating all 143 AmeriSuites and will open 50 to 60 more properties in the next several years.
    Last month, Silver Springs, Md.-based Choice Hotels International broke ground on its first Cambria Suites property, in Boise, Idaho. Hotels in this brand will have from 100 to 150 rooms, 1,000 square feet of meeting space, fitness and business centers, and a 24-hour convenience store. Choice has 14 more Cambria Suites properties in the pipeline.