Luxury Hotels - Tourists are returning

Hotel occupancy rates are forecast to rebound this year in the U.S. and Europe. Some luxury hotels have already been able to lift rates as demand for $600 rooms, butler service and poolside cabanas recovers in cities such as Miami, New York and London.

Luxury hotels have some ability to raise prices again because they were hit the most last year. They are the ones that cut prices the most - as much as 25 percent.

Europe’s total hotel occupancy may climb to 65 percent in 2010 from 61 percent last year, with the average room price in 2011 increasing by 5 percent.

Occupancies peaked in 2007 at about 64 percent in the U.S. and 69 percent in Europe.

Tourists seeking to escape a winter of heavy snow in the U.S. Northeast are also booking sunshine getaways in Florida and California.

Prices for top-end rooms declined 16 percent in 2009 as tourists and businesses trimmed travel budgets during the recession, which was the industry’s worst slump since the Great Depression. Revenue per available room at U.S. luxury hotels plunged 24 percent last year.

Now, companies including Morgans Hotel Group, the New York- based operator of hotels including the Mondrian in Los Angeles and London’s St. Martins Lane, say they are starting to increase prices in some cases.

At the Breakers in Palm Beach, Florida, where high-season rooms start at $500, the hotel expects a 20 percent increase in occupancy in this year’s off season from 2009. 

Leisure travel is leading the recovery, with travelers who may have been skipping their second holiday returning to the market.

At the five-star resort, an ocean-view room costs $649 a night for the week of March 29, according to its Web site. Amenities include lap and mineral pools at the spa deck, private poolside cabanas and the Nature’s Wonders center with animal exhibits.

Hotel shares have rallied in the past year as investors anticipated an earnings recovery. Marriott has risen 95 percent as the company cut staff, froze hiring and lowered investment spending to trim costs. It is still down 39 percent since the end of 2006.

London is being helped in part by a weaker pound. Sterling has dropped about 25 percent against the dollar and 15 percent against the euro in the past two years, making hotel stays more affordable for many foreign visitors.

Overall, Rocco Forte’s sales started to improve in November after more than a year of monthly declines, led by U.S. customers, Power said. Like-for-like sales, or revenue from hotels open for at least a year, rose 10 percent in February, excluding the impact of currency swings.