Playground's Anthony O'Brien

As the recession tightens its grip on the economy, perhaps the hardest hit segments in the lodging industry have been the luxury and upper-upscale sectors. With both consumers and businesses scaling back on spending, paying high room rates is beyond their current budgets. That reversal of fortune is apparent in occupancy, ADR and RevPAR figures. Using statistics from Smith Travel Research, Friedman, Billings, Ramsey & Co. Inc. reports that for the week ending March 14, luxury and upper-upscale hotels saw RevPAR declines of 32.7% and 26.3%, respectively.

Meanwhile, PKF Hospitality Research, taking a longer view, predicts that the luxury segment will see an occupancy decline of 10% to 61.1% in 2009, with ADR going from $288.71 to $264.38, a drop of 8.4%. RevPAR will take a 17.6% dive, decreasing from $195.98 in ’08 to $161.52 this year.

For upper-upscale, the numbers aren’t much better. Occupancy is forecast to dip 11.6% to 60.7%, while ADR is expected to take a 9.2% plunge to $145.18 from $159.88 in 2008. RevPAR will edge down to $88.12 from $109.79 in 2008, a decline of nearly 20%.So how is a luxury hotel operator and/or developer to survive? GlobeSt.com recently spoke with Anthony O’Brien, Montreal-based senior vice president at Playground Limited Partnership, a division of Intrawest, which operates 11 ski and beach resorts in Canada and the US. He oversees the sales and marketing teams for the condo hotels and condos at all of those North American resorts. Clearly, the marketplace is quite different today, necessitating new strategies, he says. But location still matters.