Business Travelers Return to Luxury Hotels

Companies are returning to high-end hotels, just as frequent travelers

Oct. 15, 2011— -- When frequent business traveler Jeff Rosenthal left behind a shirt and an important document at the Ritz-Carlton in Singapore in May, the advantage of staying at a luxury hotel hit home.

Unaware anything was missing, Rosenthal was in a Singapore airport lounge when the hotel called about an hour before his flight to Bangkok.

"They rushed the document and the shirt to the airport and were able to get an Emirates airlines staff member to run it to me with 15 minutes to spare," says Rosenthal, a New York-based senior vice president in the transportation industry. "They have not asked for any payment — a good deal considering airport-to-hotel transportation is well over $250 each way."

Rosenthal is one of many frequent travelers who point to the benefits of staying at the Ritz-Carlton and other high-price luxury hotels, which are seeing their business rebound after a few dismal years.

Luxury hotels were hit hard by the recession and Corporate America's concern about being seen as extravagant after insurance industry giant American International Group (AIG) was blasted by Congress in 2008 for spending $440,000 on an executive retreat at a California resort after being bailed out with taxpayer money.

"Many large, influential public companies altered their external travel policy whereby fewer, if any, corporate execs were allowed to stay in upper upscale and luxury hotels," says Steven Carvell, an associate dean at Cornell University's School of Hotel Administration.

But those policies are fading with time. Companies are returning to high-end hotels, just as frequent travelers such as Rosenthal have.

Chris Gabaldon, Ritz-Carlton's chief sales and marketing officer, says room rates are cheaper than in early 2008, and "the meetings business is strong again and almost back to pre-recession levels."

The average daily room rate at luxury hotels rose to $252.15 in the first eight months this year, according to industry statistician STR of Hendersonville, Tenn. That's up from $237.06 in the same period last year but down from $285.47 in 2008.

Occupancy rates have rebounded. In the first eight months of this year, it was 70.7% — a big increase from 62.4% in the same months in 2009 and identical to the first eight months of 2008.

Travelers such as Rosenthal are part of the reason. He says 205 of the 211 nights that he spent in hotels this year were in luxury hotels.

"What's not to like about luxury hotels?" he says. "The personalized service and the fact they try never to say 'no' are the main factors."

Many pluses

Among the pluses of a luxury hotel are knowledgeable concierges, business centers, quick laundry and ironing services, around-the-clock room service and attractive areas for business meetings, says Shane O'Flaherty, CEO of Forbes Travel Guide.

As Rosenthal says, "Especially with long flights and time changes, things such as 24-hour room service, 24-hour business centers and gyms can make the difference between feeling well-rested and ready for work as opposed to dragging oneself to meetings half asleep and taking twice as long to get the same amount of work done."

Don Schmincke, an author and speaker in Baltimore who stayed in luxury hotels about 100 nights this year, says high-end hotels are better at accommodating business travelers' "stress factor" from being in planes more than 15 hours a week.

"They have better food, 24-hour room service to fit your quirky sleep schedules, better business centers, better gyms and more comfortable beds," he says. "It's weird, but sometimes the little things help a lot when you're working 80 hours a week on the road and find a few moments of bliss."

Meeting expectations

Forbes Travel Guide, formerly Mobil Travel Guide, rates 2,400 hotels in the USA, Canada and four Asian cities and designates only 54 as five-star, or luxury, hotels. At these hotels, O'Flaherty says, "You know all your expectations will be met."

"Their goal is to wow you, to surprise you, to make your day in some unexpected way," the travel guidebook publisher says. "Their job is to anticipate your needs, to engage you in appropriate and relevant conversation, to charm and go beyond what would be a standard transaction."

Despite the pluses, luxury hotels also have minuses, some travelers say.

Karen Moawad, a management consultant from Bainbridge Island, Wash., stays about 120 nights a year in luxury hotels. While she says she loves "the higher-grade sheets, décor and amenities," it's "infuriating" that, unlike less-expensive hotels, luxury hotels charge extra for Internet service.

Not every traveler is returning to luxury hotels. Not every company allows its people to stay in them. And not everyone says they really need them.

Bob Lorentzen of Bradenton, Fla., is a frequent traveler who says his days of staying in luxury hotels are over. Before the recession, he routinely booked a hotel near where he was working without considering price.

Now, he says, many clients have "dollar caps imposed by their corporate travel departments" that exclude luxury rooms, "and it wouldn't look good for me to be staying where they can't."

He says he's found he can live without some luxuries. He doesn't need to have hotel staff hold a door open or carry his bag to a room, he says. He likes not waiting for an elevator during the morning rush in a multistory hotel.

"I'm doing just fine," Lorentzen says, "parking my down-sized rental car outside my door, not finding a fluffy robe in the closet and shining my own shoes — and significantly cutting my travel and lodging expenses."