Q&A on … Lodging Outlook 2006
by Joy JordanWith:
Wendy Northcross, CEO, Cape Cod Chamber of Commerce
Elizabeth White, Director of Marketing Communications, Massachusetts Office of Travel and Tourism
Elizabeth Noyes Deschenes, Interactive Communications Manager, Tourism Massachusetts
Rachel Roginsky, Principal, Pinnacle Advisory Group
What are your predictions for the upcoming lodging season?
Elizabeth White: Domestic visitor volume increased in Massachusetts from 2003 to 2004 by 16.3 percent; in the rest of the United States it increased 2.6 percent. This indicates strong growth here.
Rachel Roginsky: Recent trends show that supply is not an issue, international demand is strong, pricing is aggressive and establishments face higher operation costs. Nationally, numbers for room rate, demand, revenues per room are all predicted to be going up. On the Cape and Islands, we predict 2006 occupancy figures to be up 1 to 2 points, average room rates to be up 4 percent to 6 percent, and revenues per room to be up 5 percent to 8 percent.
Where do visitors to Cape Cod come from, and where do they stay?
Wendy Northcross: According to our research, most visitors come from nearby: 42 percent from Massachusetts, 16 percent from Connecticut and 10 percent from New York. The Cape Chamber has acknowledged this trend in its summer ad campaign branding Cape Cod as “A Short Trip to Far Away.” Additionally, because of the origin of the bulk of Cape visitors, when gas costs spike, the Cape actually benefits, as travelers will often opt for a shorter trip than a longer drive
In 2005, Cape Cod had 3 million visitors, and 45 percent of them stayed in private homes, 37 percent stayed in hotels, motels or B&Bs and 9 percent stayed in a condo or timeshare.
What factors determine demand for lodging on the Cape?
Roginsky: Demand factors include the weather, conventions in Boston (as attendees use down time or time before or after their event to visit the Cape), increased competition from rentals, improving group tour demand, gas prices, and stable or decreasing supply. Occupancy figures for 1998 to 2005 show a drop-off after 9/11, and the numbers have been flat since. On the other hand, the average room rate has gone up and down, and it’s on the way up now.
What are local and state organizations doing to entice visitors to the Cape?
Northcross: The Cape Cod Chamber of Commerce’s spring/summer 2006 marketing plan includes: 14 percent print magazines, 26 percent newspapers, 14 percent billboards, 10 percent radio and 36 percent television. Cooperative ads with members play a big role – they give the ability to leverage dollars. Internet marketing has taken a larger focus recently, especially after the redesign of chamber Web site last year. Visitor publications are a constant and popular offering and they are sent free to anyone who requests them. A new product in this category is the Arts and Artisans Trail Guide.
White: The Massachusetts Office of Travel and Tourism’s spring 2005 ad campaign focused on out-state-travelers, who generate $55 million on travel expenditures. For every $1 spent on marketing Massachusetts, the state realizes $29 in return and $1.98 in tax benefits. MOTT’s winter lodging promotion partnered with lodging properties to offer specific price point packages appealing to budget-conscious travelers and used banner ads and e-mail, plus print, directing traffic to www.massvacation.com.
In addition, MOTT launched its spring ad campaign on NBC during the Winter Olympics coverage. The 2006 campaign features three photographic images, two of which were shot on Cape Cod.
MOTT’s primary marketing tool is the Massachusetts Getaway Guide, with a circulation of 750,000. MOTT’s research department is heavily relied on – ad campaigns are driven by research (tracking data on visitors, stays, money spent, etc.; ad effectiveness; segmentation studies; and ROI). Also, group tours are a growing market focus for MOTT.
Elizabeth Noyes Deschenes: Tourism Massachusetts is a new company focused on promoting Massachusetts as a tourist destination, with a goal of generating income and revenues for the state and its businesses and with a special focus on the global market. The World Tourism Organization notes that international travel is up 5.9 percent in 2005, and predicts 5 percent annual increases. Tourism Massachusetts’ goal is to recapture that market.
On Cape Cod, familiarization trips for travel professionals have generated $4 million in ad revenues; for example, clam chowder from Capt. Parker’s restaurant was served at a recent Icelandic Air conference. Golf marketing initiatives also are an important component.
Much of the marketing will be Web-based, using www.usamass.com, the new Tourism Massachusetts site featuring online reservations, eight languages and cutting-edge technology.
To reach international travelers, we recommend lodging establishments make sure to focus on packages and tour operators and host press trips.
The above comments are from Outlook 2006, the lodging industry forecast presented at the BizWiz conference on March 14, 2006.
Joy Jordan is managing editor of Cape Business magazine. She has worked in the technology and publishing industries and was chief copy editor for Cape Cod Community Newspapers. 
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