NEW YORK, NY – As the recession unfolds, a growing number of budget-minded business travelers are shifting to lower-price hotels, whether by choice or because their bosses are telling them to.

The biggest beneficiaries of the shift, travel experts say, are the hotels that keep prices down by not offering amenities like restaurants or meeting rooms.

“Travel managers have told us within their companies they’re moving travelers to lower-tier hotels, ” said Caleb Tiller, spokesman for the National Business Travel Association. “It’s definitely a trend we’ve seen.”

He said companies were taking a varied approach to the switch. Some are requiring it, others strongly encouraging it and others trying to set an example by having even top executives book more modest accommodations.

For those now staying at more bare-bones properties, the downgrading has some discomforts. Alan Hawrylyshen, a technology applications director for a manufacturer of mobile and voice-over-Internet networks, said he had encountered a host of minor inconveniences.

At full-service hotels where he once was a regular, Mr. Hawrylyshen said checking in was welcoming and efficient. “There was never a line. They’d be expecting you, greet you by name.” Hopscotching to different hotels in search of low rates now means staying at places where his information is not already in the computer system.

“Suddenly, checking in takes longer because they have to process your credit card and you have to fill out forms,” said Mr. Hawrylyshen, who travels one to four times a month. “It adds 10 minutes or more, sometimes up to half an hour” to his already hectic schedule.

Unfortunately for travelers like Mr. Hawrylyshen, this trend show no signs of abating. According to Peter C. Yesawich, chairman and chief executive at Ypartnership, a travel marketing and research company, a quarter of the nearly 800 business travelers surveyed this year indicated that they were booking less expensive hotels.

The trading down has been occurring on all levels: top executives who may have previously stayed at luxury hotels are staying at full-service hotels, while middle managers who used to stay at those properties are now switching to limited-service hotels.

“If you used to stay in a full-service Sheraton, Marriott or Hilton, you may trade down to a Four Points, Courtyard by Marriott or Hilton Garden Inn,” said Al Calhoun, managing director of Jones Lang LaSalle Hotels, a real estate management and investment firm.

Industry analysts say the one sector that has fared better than others is what is known in the business as “upscale” or “select-service” hotels. While the terminology may not be familiar to travelers, the brand names are likely to be; Courtyard by Marriott, Hilton Garden Inn and Four Points by Sheraton, among them.

These hotels are distinguished from their full-service sister brands by a lack of restaurants, lounge areas or meeting rooms. While some hotels may have one or more of these amenities, they vary by property. By contrast, their presence is a given at full-service hotels.

According to Mr. Calhoun, revenue per available room, a crucial measure of a hotel’s fiscal health, has not dropped as sharply for select-service properties as it has for other types of hotels. While room rates have softened in recent months, prices have been hit hardest at luxury and full-service chains.

Data from Smith Travel Research shows that hotel room rates dropped by an average of 8.1 percent in the first four months of the year, compared with the same period in 2008, with rates at luxury hotels falling by 13.9 percent and rates at select-service hotels declining 8.3 percent.

Select-service hotels are also holding their own in occupancy. Occupancy rates are expected to fall across all hotel levels in 2009 because of the recession’s impact on business and leisure travel. However, Robert Mandelbaum, director of research information services at the consulting firm PKF Hospitality Research, said select-service hotels would end the year with less of a drop than most other brands.

While overall occupancy is expected to drop by 5.6 percent and luxury hotel occupancy by 8.3 percent, select-service occupancy is projected to end the year with a much smaller 3.7 percent decline.

This relative robustness could prove to be a double-edged sword in the coming months, though. Hotel investors and developers are increasingly flocking to these types of properties because the select-service hotels are viewed as a relatively safe haven during a time of overall distress for the industry.

“They’re cheaper to build, they’re cheaper to maintain and they’re cheaper to operate,” said David Loeb, a real estate analyst at Robert W. Baird & Company. He said new hotels were opening at a rapid rate and would most likely add to the problem of too many rooms and not enough travelers to fill them.

“The impact of all of this new supply is a really bloody market-share war,” he said. “The operators of these hotels are trying really hard to achieve or keep market share, and they’re doing that by lowering prices.”

While this is bad news for hotel operators, it is a silver lining for road warriors and corporate travel managers trying to hold the line on lodging expenses in a tough economy.

Copyright 2009 The New York Times Company. All rights reserved. From http://www.nytimes.com. By Martha C. White.
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