Luxury hotels use economy as a sales pitch

As Dallas-area hotels are struggling, some are trying to put a positive spin on an unpopular topic — the floundering economy. From bailouts to stimulus packages, hotels have become leaders at taking the unfortunate buzzwords of the times and turning them into marketing gold.

“ ‘Stimulus’ and ‘bailout’ are the ‘green’ of 2009,” said Sam Huston, director of engagement planning for Dallas-based The Marketing Arm. “It’s not a bad thing. It’s part of the lexicon. And really, it’s a more socially acceptable way to say ‘discount.’ ”

The benefit of basing promotions on the lousy economy is that it makes consumers feel as if the company is at least acknowledging that times are tight, if not being completely sympathetic.

While the hospitality industry is not the only one making such a sales pitch, it has more at stake since travel is often discretionary spending. “We are acutely aware of what people are going through,” said Noeha Coutry, director of sales and marketing with the Ritz-Carlton Dallas.

The Ritz is offering the Frugal Friends’ Fling, marketed as a “most practical room and spa experience,” featuring a room, parking, martinis and manicures packaged for a reduced rate of $349 per night.

“It’s almost become in-fashion not to be too ostentatious or appear to be going over the top,” Coutry said. “At the same time, we wanted to provide people the opportunity to do something for themselves.”

The Ritz package is targeting the “drive” market, travelers taking advantage of the recently trendy “stay-cation.” It also targets what it calls “practical divas.”

“When times are tough, people still want to be able to enjoy life’s little indulgences,” Coutry said. The Ritz has 218 rooms and a 2008 estimated occupancy rate of about 63%, according to San Antonio-based Source Strategies Inc.

Kimpton’s Hotel Palomar Dallas is offering a “Sweet Tax Relief” promotion through April. The hotel will pay room tax and sales tax on a meal at the Central 214 restaurant. Guests also get candy bars, such as Payday, 100 Grand or Sugar Daddy.

“We’re making it a little more fun and interesting,” said Tracie Houston, area director of sales and marketing at Hotel Palomar. “Really, we’re trying to drive some additional business and pull some creativity into it.”

Houston said it’s a challenge for hotels to remain competitive while being sensitive to clients’ needs. “We want to make sure we’re maintaining the level of occupancy that we need,” Houston said. “So far, we’ve had zero layoffs. We have had to sacrifice some of our rates.”

The 198-room Palomar had an estimated 2008 occupancy rate of 64%. The 145-room Hotel ZaZa is offering Bailout Bucks, $100 in credit to be redeemed at the restaurant, spa or for the cost of a room, to be used on a return visit to the hotel.

“Everyone’s talking about how all the companies are getting bailed out and what the government’s doing to help corporations and individuals,” said ZaZa President Benji Homsey. “We tried to have fun with it, but also give our guests a way to still spend money in our outlets.”

Homsey said ZaZa relies heavily on corporate travel, and the occupancy rate for 2008 dipped to about 60%. In the fourth quarter, Dallas metropolitan room nights sold dropped 2.5%, according to Source Strategies, causing revenue to decline 3.4%. The area’s average occupancy rate dropped to 56.4%, below the state average.

Homsey said in the hotel business, there are two prevailing philosophies on how to fill rooms. It’s either “heads and beds,” filling the room at whatever price you can, or holding the rate and trying to preserve brand integrity.

“It’s a balancing act,” he said. “You lower your rate too much, then you lose what you’ve created.” Huston predicts the next wave in marketing campaigns and promotions will focus on concepts like happiness, togetherness and hope. “People are really tired of bad news and of seeing the negative things,” he said.

By Katherine Cromer Brock, Philadelphia Business Journal