The Hotel Industry has more competition to worry about outside of the hotel networks. This competition is not from one hotel chain to another or from one hotel to another. It is competition from the vacation week industry. This also includes the Time Share ownership industry.
The new industry challenging the hotel business is the Vacation Week Time Share owners. One of the Big organizations in the Time Share industry is RCI (Resort Condominiums International). They have been around since 1974 and have over 3700 Resorts in their network in more than 100 countries. They are a service organization that assists owners in saving, transferring and using their Time Share vacation weeks.
The real prize behind the concept is that the individual owner actually owns real estate in the form of a condominium for the period of one or more weeks. For example, business owners will look for good new condos North York has to offer, investing their money to make each unit well-suited for a time share business. The resort will take the condominium and sell "weeks" of use. This is generally around 50 units or weeks that are sold on the average, reserving 2 weeks for maintenance.
How has this affected the Hotel industry? In areas that are destinations for vacations, the resort industry has begun building more resorts and selling Time Share vacation weeks. As this industry has become more successful, it is dipping into the profits of the hotel industry by lowering the occupancy rates.
How is the hotel industry fighting back? In some areas, the Hotel chains might be able to lower rates but is this a viable answer? This writer does not believe it is the answer. The answer is to provide what the vacationing family is looking for. If you only provide a room with 2 double beds, then your competition is best met by location of your hotel against that of another that is providing a room with 2 double beds.
The real competition is to provide some of the amenities that the vacationing family is buying when they buy into the Time Share vacation weeks. There are 2 areas that the hotels are competing that we will address. The first is Hotel Condo Sales. The second is Water Parks.
Hotel Condo Sales is similar to Time Share vacation weeks but the hotel condo is sold to one individual or family instead of 50. The hotel condo is available more than the Time Share week. The hotel would make stipulations on this aspect. The condo, when not being used by the owner is being rented out much like a hotel room but the owner would share in the profit.
The second concept that hotels are using to attract patrons is the use of indoor water parks. When you think of water parks, you think of summer time, heat and cooling off. You also think about riding water rides and looking up at the sky. There is a new trend in the Hotel Industry of taking this concept indoors.
These hotels that are offering these amenities are top notch hotels and offer the best amenities. They are attracting more families with their family friendly amenities. The water parks have increased the occupancy rates of these hotels although the daily rates are a lot higher. The hotels are seeing that their customers are willing to pay more for their room rates when they have amenities such as a water park. You would expect to find these hotels with their water parks in the destination resort areas. But where are they? The majority of these hotels are in Wisconsin and Minnesota with Wisconsin having 42% of these indoor water parks.
There are such places as the Grand Rios, which came into existence as part of a $45 million renovation of an old Ramada Inn. Their occupancy rate went from around 30% to over 90% while their room rates almost doubled. The addition of the indoor water park has served their guests well.
Twelve years ago, there were only 5 indoor water parks in Canada and the United States. Now there are more than 70. These water parks have definitely boosted occupancy rates at the hotels but the hotel owners know they cannot rely on this amenity alone. Some of the hotels are very attractive to business customers as well with meeting rooms and ballrooms. Some of the hotels have upscale rooms to make it very comfortable for their guests. Some of the hotels have utilized other surrounding amenities such as golfing and horseback riding. These hotels are divided dependent on management decision on opening their facilities to non-guest of the hotel.