Luxury hotels

Luxury hotels raise rates, but cut services – Robb Report

Jeff Tolkin has just returned from a family trip to Southern California. The New York-based entrepreneur and his family stayed at a well-known five-star resort for a well-deserved break, although Tolkin was unable to relax as expected. He kept noticing small gasps, the feeling that the service was both frayed and worn out. The blanket was an hour earlier than requested and the extra body lotion never appeared in the bathroom. There was a power failure overnight, but no generator worked as a backup. The worst was the breakfast. “My son’s eggs had clearly been destroyed in a five-star hotel?” He said, bewildered, and especially after paying $ 961 per room, per night, plus an added $ 50 resort fee.

Tolkin’s perspective is particularly relevant, as he’s not just a seasoned luxury traveler; rather, he is co-chair and CEO of World Travel Holdings, one of the largest conglomerates in the industry. Tolkin warns that these shortcomings have a long-term impact on perceptions of quality at luxury hotels like this one. “Even the rich don’t want to get caught up: if you ask for good coins, you have to do good service in the areas that work,” he says, “If you take out too much pizza, you run out of pizza. There is a limit to what you can take with you before you have the same experience.

Sub-par service and sky-high rates are a risky mix

It’s a looming problem in the luxury travel industry, which is seeing its profits rise as it still struggles to return to pre-pandemic service levels.

Rates have not only rebounded, they are skyrocketing. By statistics provided to Robb Report According to hotel data firm STR, the average daily rate at a luxury hotel in America in the second quarter of 2021 was $ 321.58, more than 7% higher than the same period two years ago; Given that 2019 was a banner year for travel, this is an impressive achievement. New York based travel agency Lark Recount Robb Report that fares at resort destinations in the United States had increased further, averaging between 20% and 30% over the same period.

Yet, as travelers pay more for a room, they often end up with a less-than-stellar experience. Cari Gray, who directs Robb Report Best of the Best Gray & Co award-winning travel agency, saw shortcomings similar to those Tolkin witnessed. “I was in a lodge the other day [that] said they couldn’t buy bread for the restaurant, because the local baker in town wasn’t getting enough flour, ”she says, although there was no reduction in the price by night. Likewise, at another five-star ranch, breakfast and lunch were served buffet style; staff levels were too low, according to the hotel, to provide table service. “I’m sorry, but we’re still in a pandemic, and I don’t want to touch a spoon that everyone has,” she said, shrugging her shoulders.

Reactivating local workers on leave takes time and money, both of which are rare among hoteliers desperate to seize this new opportunity. “The cost of execution has become much higher, with more untrained staff and more shortage of supplies,” she adds. The problem is compounded by the fact that temporary workers, on whom many seasonal beach resorts depend, arrive in America, mostly from the Caribbean, each year on J3 visas. Thanks to the pandemic, of course, “none of these staff make it into the country.”

The ‘journey of revenge’ phenomenon fuels the wave

It’s hard to fault hotels for raising their rates, of course. Five-star hotels that have been limping since spring 2020 can potentially recoup 12 months of losses simply by raising their prices to meet growing demand this summer. And they know that rich Americans are emerging from the pandemic more than ever: billionaires, for example, it is estimated that they have amassed $ 1 trillion extra in the first 10 months. They also want to spend it on travel: A recent McKinsey report showed that 44% of Americans intend to splurge on what has been dubbed “Journey of revenge” This year. But overcharging and under-delivery is a long-term threat to the reputation of the luxury sector that could be far more damaging than the challenges of last year.

Simply, it’s because lavish service is now the biggest draw for luxury travelers. In the old days, five-star hotels could wow guests with the opulence of their decor and amenities, perhaps think of multiple pools or a beach club. Now, however, wealthy Americans often live in homes that match more than the physical size of hotels. Service is therefore the USP for VIPs, as Gray explains. “Most of our customers aren’t very price sensitive, but they are very, very service sensitive,” she says, “And overall service levels are dropping.”

Connecticut-based Meg Nolan runs Friend tip from a friend, another luxury travel agency. Nolan has just returned from an east coast resort where rooms this summer cost around $ 1,800 a night. The pool had room and chairs for 30 people, but over 60 were crammed there; only one harassed waiter was dealing with their drink orders resulting in hours of waiting. The resort did not prepare cocktails despite the backlog. “I think some hotels have been more honest about their service gaps and staff issues. This hotel had some very obvious personnel issues, but nobody said anything about it, “she laughs,” I just found out because I asked the spa therapist what was going on.

Amangiri Hotel

Photo: Courtesy of Amangiri

Why independent hotels are the safest bet this year

Not all luxury hotels have fallen prey to the temptation to raise rates or hide deficits to bounce back from their pandemic-induced losses, of course. Take Amangiri, Utah, where Nolan has sent many clients; his frankness was refreshing. “The rates are still high, around $ 2,900 per night, but I don’t think they’ve increased them,” Nolan notes, “From the start they said, for example,“ No tours to Bryce or Zion right now – they’re too crowded and we can’t find the right guides, so it won’t be Aman’s typical service. ‘ Grace Bay at Turks & Caicos is another outlier, according to Paul Tumpowsky, founder of Skylark. Tumpowsky remembers this spring, when the rates for five-star hotels in Miami hit those usually seen during the Christmas and New Years period. Grace Bay, offering a similar chance in winter sun for snowbirds, did not increased prices. “They said ‘These are our usual rates this time of year, these are the customers we want to support’ – it’s a really respectable thing to do.”

Grace Bay has a particular advantage under the current circumstances, according to Tumpowsky, as the property is both owned and operated by the same company. This is how hotels have traditionally operated – think luxury family-owned properties on the Amalfi Coast – but many are now focused on real estate: a developer will partner with an operator like Hyatt or Hilton to run the day-to-day. These two types of hotels have radically different priorities: Owner-managed properties are likely to think long term, want to retain customers for 2022 and beyond, and act accordingly. When a developer sees a property bleeding red ink, he or she will react abruptly. “Owners make a Zoom call with the big brands and say ‘We got killed last year, we want our money back fast. “” For smart travelers, then, 2021 is the summer of independent ownership.

Wherever you go, however, take a break for a moment. While many hotels can turn out to be unprofitable this summer, remember that there is a responsibility on both sides. If a property maintains its rates and gives forthright warnings before a stay, like Amangiri, travelers should respond with grace and patience. “So many of the staff will be delighted to see you, and for those who have been put on leave, being back in their profession is just pretty deep,” said Nolan of Friend of Friend. “Maybe it’s worth thinking about forgiving something like a late refusal if someone is so thrilled you’re there. Tumpowsky agrees.“ It’s about setting expectations in this new environment. Everyone’s job at the hotel has changed, so we need to be open-minded about what the new world is.


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