‘Boom could bust over prices'

Booming occupancies make it a great time to be in the hotel business, Alan Parker, managing director of the Whitbread Hotel Company, told the conference.

But the industry remains vulnerable if consumers suffer a drop in disposable income as a result of recession, he warned. "Surely it's better to break the mould of boom and bust and give customers consistent pricing?" he argued.

By holding down rack rates at its Travel Inn and Marriott hotels during the current boom, Whitbread had managed to stop discounts and build up long-term loyalty among customers, he claimed.

Research data showed a 5% growth in the domestic hotel market in the past 12 months, with a total of 11 million adults using a star-status hotel at some point during the year. "This leaves 75% of adults not using hotels," Mr Parker pointed out.

The fact that growth was occurring in the leisure market, rather than among business travellers, where the numbers were fairly static, reinforced the need to challenge the traditional pricing policy of hotels, argued Mr Parker.

But his viewpoint was not shared by other speakers at the conference. Peter Taylor, UK regional director at Millennium & Copthorne, said that hotel companies should be driving their room rates forward. "If I was a shareholder of Whitbread, I'd be worried," he added.

Michael Cairns, chief operating officer at Queens Moat Houses, agreed with Mr Taylor. "In the economic cycle there is a window of opportunity that motivates pricing policy," he said. "If you don't take advantage of this, there will be problems."