Business Travelers Return to Luxury Hotels

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.