Score Hotel Bonuses and Free Nights

Oct. 1, 2010— -- In normal times, hotel promotions are on-again-off-again events, keyed to run during low-demand periods of the year, and disappear during those months when travel demand is more robust.

They're cyclical, and predictably so.

But the protracted economic slump has turned such simple marketing assumptions on their heads. It's been one long, undifferentiated slow season, spurring the major hotel chains to deploy back-to-back-to-back promotions for almost three years.

But that's ancient history. What travelers want to know today is what hotels can do for them tomorrow.

Looking Ahead: Current Data

One reliable indicator of hotels' future behavior is their current performance. Free nights and bonus miles would be a costly extravagance if their business had already rebounded fully. It hasn't.

While there are signs of strength, occupancy rates and room tariffs have a long way to go to regain their pre-recession levels.

According to STR, an industry research company, U.S. hotel occupancy rates for July 2010 averaged 67.9 percent, a 7 percent improvement over the same month last year, but still below the levels in 2004, 2005, 2006, and 2007, when occupancy rates routinely exceeded 70 percent.

Average daily rate (ADR), another key industry benchmark, is even more telling. For July, the ADR was $99.14, a mere 1.4 percent improvement from July 2009, and still 7.6 percent below the July 2008 ADR. Year to date through July 2010, ADR was $97.53, off 1.4 percent compared to the same period last year, and off 9.9 percent from 2008.

So while travel may be on the road to recovery, it's stuck in the slow lane.

Looking Ahead: Current Promotions

The combination of sluggish current momentum and uncertainty over what competing hotels will do is likely to spur the hotel companies to continue their promotional push well into next year.