The Hotel Room Glut

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Hard hotel times aren't likely to elicit a lot of sympathy from those of us who pay the bills. Nightly rates at the nation's 4.4 million rooms have been rising at about twice the rate of inflation for years as hotels made the most of rising demand. Or as the travel manager of a corporation with thousands of business travelers told me graphically last week: "Hotels made it clear who had the hammer when we negotiated rates the last couple of years. But when we start doing contracts for 2009 after Labor Day, I'll have the hammer. And I'll be whacking some knees to get my prices down."

To shore up sagging bookings, hundreds of hotels around the country are wooing travelers with free gasoline cards that slice as much as $50 off the effective nightly room rate. Other hotels are dabbling in more traditional value-added inducements: free breakfasts or dining credits in the hotel restaurants; complimentary massages or a free round of golf; gift cards at nearby department stores; and a blizzard of swag such as logo shirts, hats, and sunglasses. (See a slide show of hotel deals here.)

In the Caribbean and Hawaii, where flight cuts have made it much harder for guests to visit, concessions have been even more dramatic. Sandals, which operates a dozen couples-only all-inclusive resorts in Jamaica, Antigua, St. Lucia, and the Bahamas, has been advertising discounts of as much as $1,100 a couple. The savings is offered as an "air credit" against your bill to offset the high price and inconvenience of flying. More than a dozen hotels in the Turks and Caicos have banded together to offer guests a fourth night free. A travel packager has been promoting summer vacations on the lush (if rainy) Hawaiian island of Kauai, with free car rentals, meals, wine, and, of course, free nights.

There is one thing hoteliers aren't yet offering in great supply: lower room rates. "Luxury properties especially hate lowering their room rate" because they think it hurts their image, explains Michael Matthews, whose résumé includes notable marketing and managerial stints at Rosewood, St. Regis, Ritz-Carlton, and Regent hotels. "If he can avoid cutting the rate in the downtimes, a general manager will give you virtually anything else you ask for: room upgrades, free cabanas at the pool, a suite, limo service, spa treatments, free meals."

To make sure you get the best perks, "call the general manager before you arrive and introduce yourself," Matthews says. "Don't be pushy, but let him know you'd like more for your rate."

What happens if value-added perks don't put our heads on their beds this fall and winter? "We'll make the offers even richer," the top marketing executive of a major mid-priced brand told me last week. "As a last resort, we'll look at rate cuts. But I hope we don't get to that."

The Fine Print…

Hotels in New York, Philadelphia, and Miami continue to do well, primarily due to an influx of European travelers who are taking advantage of the weak dollar. Bargains will be scarce in those cities. But Las Vegas is already suffering from a massive decline in visitors and prices. Nevada gaming officials say the take at the city's casinos was down in May for the fifth consecutive month. And a website devoted to Vegas says nightly room rates have plunged after five years of escalating prices.

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