Hotels See Increase in Travel

New York, July 7--Business travelers are back, and hotels are greeting them with higher rates. After several years of hunkering down in the home office, many executives are stepping up the sales calls and spending some overdue face time with key clients. That's giving hoteliers some pricing power that is affecting not only business travelers but vacationers as well. The business-travel boom is biggest in New York, Washington, D.C., and Boston - helping to explain the $299-a-night price for a room at the Sheraton Boston last week. At the Four Seasons in New York, the smallest and least expensive type of room goes for $545 a night. The comeback began late last year and has picked up speed since then. During the first quarter of the year, hotel-room prices increased 3.1 percent to $86.89 in the U.S., according to Smith Travel Research. Business travel, in decline since 1999, is expected to rebound this summer with a 5.7 percent increase in trips over last summer, according to the Travel Industry Association of America, a Washington trade group. That jump - which is stronger than predicted in January - is leading analysts to boost their earnings estimates for big hotel companies. As they fill with expense-account travelers, hotels are yanking the discounts from the customers who kept them afloat over the past three years: budget-conscious vacationers and tour groups. "The pain is going to be felt by the leisure traveler," says Andrew Winterton, a vice president with American Express Co. It's already tougher this year for families to find the offers of free breakfasts and other perks that business hotels have been freely distributing for the past three years in an effort to fill empty beds. For instance, Starwood Hotels & Resorts Worldwide Inc. is no longer offering the range of bonus points and free nights that it was using to draw leisure travelers to its properties last year. At other chains, third-night-free offers, which were common last summer, have all but disappeared from hotel Web sites this year. Until recently, Gaylord Entertainment Co., the Nashville-based operator of convention hotels like Opryland, had been filling its huge facilities with low-paying association meetings. But now, those customers must contend with revived competition from bigger spenders who have recently signed contracts for future meetings, including consumer-products maker Procter & Gamble Co. and flooring manufacturer Mohawk Industries Inc., a Gaylord spokesman says. At the Ocean Club at Paradise Island in the Bahamas, several huge luxury villas - with prices starting at $3,500 a night - are being booked up by boards and other executive groups seeking to "bond" with one another, says a spokeswoman for Bahamas-based Kerzner International Ltd., which owns the resort. Companies are beginning to reward top salespeople with trips to the Caribbean and Hawaii, where bookings are up substantially for this coming winter at some Marriott resorts. Business travelers are traveling frequently to Asia, as well, particularly to China. This is welcome news for the hotel industry. Corporate travelers are prized by hotels, largely because they're less cost-conscious given that the office is picking up the tab. Hilton Hotels Corp. estimates that this year business travelers are paying on average $25 a night more than leisure travelers, helping send its first-quarter revenue up 9 percent. Starwood says it saw a 15 percent increase in business travel in the first quarter. In New York, Starwood's business is up as much as 30 percent from a year ago.