When the economy was booming, many hotel companies began building new properties. Some of those are opening now, resulting in a 2.5 percent increase in hotel room supply this year, just as demand is dropping by around 1 percent or more, according to Jan Freitag of Smith Travel Research.
"We're going to see a substantial decline in occupancy this year," agreed Bjorn Hanson, an associate professor of hospitality and tourism at New York University's Tisch Center.
Excess supply means opportunities for consumers. Here are some strategies for booking hotels on a budget.
Basics: It's generally cheaper to stay in major cities on weekends, when there are fewer business travelers, and in resort areas on weekdays and offseason, when there are fewer tourists.
Visitors to urban centers may save by booking outside main tourist areas. For San Diego, for example, "you could stay in Carlsbad or even up as far as Oceanside," said Joe McInerney, CEO of the American Hotel & Lodging Association. But research the cost and time of commuting in each day, to make sure the tradeoff is worth it. McInerney pointed out that hotels on Long Island or Westchester might be cheaper than Manhattan, but your savings might be offset by daily train and cab fare or tolls and parking.
You'll also pay less outside of peak holiday time, and some new hotels charge lower introductory rates. Canyon Ranch's new destination spa in Miami Beach has nightly starting prices at $200 through Dec. 3. Rates go up Dec. 4-23, starting at $650 a night, and Dec. 24-Jan. 1, to $1,100 a night.
Places hard-hit by the downturn may also offer deals. The Bahamas' Atlantis mega-resort, with nearly 3,000 rooms on Paradise Island, recently laid off 800 workers. It's now offering a three-night package starting at $299 a person, including two sessions interacting with dolphins (normally $110 each), and $99 airfare each way on JetBlue from New York, $89 from Boston (book by Dec. 18, offer ends Dec. 25, blackouts apply). In addition, the Nassau Paradise Island Promotion Board is offering a $250 rebate on air-inclusive packages (three-to-six night stays, book through Nov. 30, for travel completed by Feb. 28). An Atlantis package offered this time last year started at lower rates of $259 a person, but did not include dolphins, airfare discounts or rebates.
Rewards programs: Most hotel chains have loyalty or frequent guest programs that allow you to use points for free nights. "Every traveler should be a member of every frequent guest program," said Hanson. Joining usually costs nothing; points accumulate and often don't expire; and most hotel chains now have no blackout dates for using points to book rooms.
Many hotel chains offer cobranded credit cards with enough bonus points for a free night. Sign up for a new Marriott Visa card and get a certificate for one free night's stay, plus 25,000 bonus points, which are enough for another night's stay at Marriotts in many markets, including January in Miami, where you can go to the beach, or Salt Lake City, where you can ski. If you travel with a spouse or friend, that person can sign up for his or her own card and get points for free nights as well.
Research how fast points accumulate before signing up. Different chains have different systems. With Hilton, you get up to 20,000 bonus points for signing up for Hilton HHonors Platinum Credit Card from American Express (10,000 points for your first purchase with the card, 2,500 points for each of your first four stays at Hilton Family hotels). Cardholders can also earn five points for every dollar spent at Hilton Family hotels, grocery stores, drugstores, gas stations, restaurants and on U.S. postal services and wireless phone bills.
For other purchases, Hilton cobrand card holders earn three points per dollar. In addition, the program has an option where you earn 15 points for every dollar you spend at Hilton Family hotels, as long as you choose hotel-stay points as your sole reward. Hilton also has an "earnings mall" where you can earn extra points for shopping at various retailers like iTunes.
For overviews of what each hotel credit card offers and how many dollars you must spend to accumulate more points, click here.
But be aware that when you apply for new credit cards, "it impacts your credit card rating," said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. For example, applying for four or five hotel credit cards to get several free nights with sign-up bonus points "can signal to lenders that you're desperate for credit, that you're just getting credit everywhere you can," Cunningham said. That can hurt you if you're looking to get approved for a loan.
Others who should avoid rewards credit cards, Cunningham says, are those tempted by new lines of credit to buy things they can't afford; and those who carry balances from month to month. Don't let the value of your rewards get wiped out by interest. Rewards credit cards, Cunningham added, are only for those "with the most pristine of credit ratings."
Booking: McInerney of AH&LA says your first stop should be the hotel's own Web site. "That's where you're going to get the best price," he said.
In addition, said Hanson, "most brands have a guarantee that if you find a lower rate, they'll match it or pay the difference, or you can stay for free."
Ask for discounts for AAA membership, military service or corporate rates.
Alternatively, figure out how much you want to pay, the type of hotel you'd like to stay in, and bid for a room through a booking site like Priceline.com. You won't know which hotel you're staying at until after you've paid, but you can specify the category of hotel using the star-ratings system.
Note that star ratings are inconsistent. A four-star hotel on one site might only be a three-star hotel on another. Priceline has a "Winning Bids" advice feature that eliminates some of the guesswork by providing examples of brands for each star rating along with winning bids paid in different markets. Hotels accept the discounted bids because they'd rather fill rooms at lower prices than leave them empty. Priceline says its customers pay 46-48 percent less than if they booked through the hotels directly.
Another strategy: See what rates are offered at specific hotels online, "then call the hotel directly" and ask if there's a lower rate, Hanson said. "A third of the time there will be."
"When there's an empty room, it's just losing money. Any amount of money you pay for that room is found money," agreed Tim Zagat, who has just published "Top U.S. Hotels, Resorts & Spas 2009."
Zagat encourages consumers to negotiate hard. "Ask for package rates, ask for the lowest rate, ask for an upgrade. There are all kinds of deals out there. Not to ask is to look stupid," he said.
Call the hotel at its local phone number, not the chain's 800 number. "The branded hotel company has limits on what it can do, but the individual owner can do anything he feels like," Zagat said.
Once you make a reservation, check to see if prices drop, then rebook. "If the booking pace is slower than forecast, hotels switch to a lower rate schedule," Hanson said.
Look for free Internet service and free breakfast; avoid rip-off goodies in the mini-bar, and use your cell so you don't get charged for the hotel room phone.
Despite the economy, Freitag of Smith Travel says he doesn't think hotel prices will drop the way they did after Sept. 11th. But he does think consumers can expect better value for what they pay — better views, free Internet, free access to the health club, pay for two nights and get a third free.
"The takeaway for the consumer: Don't be shy about asking for those things," Freitag said. "With occupancies dropping, the most important person in the transaction is the man or woman who checks you in. Be nice, and ask, 'Do you have a nice room for me?'"