Tuesday, May 14, 2013 | Edited by Daniel Moores
||Study Confirms Americans' Spending up 9 Percent Since 2009
U.S. consumers are spending again. After a prolonged lull following the 2008 recession's historic spending lows, consumers are now spending about nine percent more than they did just four years ago.
Gasoline, gift and healthcare spending have increased significantly, and the biggest spenders are men.
These are among the findings of the new Intuit Consumer Spending Index, from Intuit Inc., which provides a unique view into the U.S. economy. The Intuit Consumer Spending Index findings are based on anonymized, aggregated, transactional data from Mint.com, Intuit's online and mobile personal finance software.
The key takeaway? Americans are rebounding. The average household spent approximately $4,220 per month in the first three months of 2013 compared to $3,870 during the same period in 2009. The most dramatic increases came in Arkansas and the District of Columbia -- up 34 and 30 percent respectively -- with the District of Columbia also spending the most per household this year at $5,144 a month. By contrast, North and South Carolina each saw spending decrease by three percent.
The Intuit Consumer Spending Index is the only report that offers a near real-time view of actual spending, rather than survey responses of what people say they spend. It does so broadly across both categories and account types; and using opt-in demographic details from millions of users, the index accurately reflects the average American household's monthly spending by age, income level, state, and more.
Diving into the Data
By looking at all the various transactions made in more than 20 specific categories, the index shows the real-world impact of economic shifts. Analyzing spending patterns by age, state, income and gender also shows the relationship between demographic factors and individuals' spending habits. As a result, the index helps answer questions that have historically taken years to determine.
"The data we've examined here reflects a period when the country recovered from one of the most dramatic economic shifts in recent history -- showing how consumers tightened, and have since loosened spending," said Scott R. Baker, Stanford University economist and the data scientist working with Intuit to develop the index. "It demonstrates how Intuit's data can show the real-world impact of macro-economic trends on how people live."
Among the insights the index reveals:
(Source: Business Wire, 05/08/13)
- Gender gap: Men consistently spend $600 to $700 more a month than women. Where? In the first quarter of 2013, men spent more on alcohol (37 percent), entertainment (27 percent), eating out (29 percent), gas (19 percent) and overall shopping (six percent). However, women spend 21 percent more on clothing and apparel.
- Gourmet goes mainstream: Grocery spending has increased by 17 percent, due in part to the price of premium groceries. For example, Californians are spending nearly 20 percent more at premium grocers like Whole Foods Market, while they've pulled back by three percent at more general grocers.
- No more reservations about restaurants: Restaurant spending has also increased, up 11 percent, echoing what Mint.com users say: Eating out is the first area they cut when they want to save money. The recovery sends them back out, especially those under 36, who are spending 40 percent more now.
- Wallets wide open at the pump: Gasoline is one of the fastest-growing categories, close to doubling in the time examined. The average American household spent $198 a month on gas in the first three months of 2013, compared to $110 a month during the same time period in 2009. Continued high prices at the pump are the leading cause, with the cost of crude oil doubling from 2009 to 2013. Looking at how gas spending breaks down across state lines, Wyoming and Iowa were hit the hardest, with spending nearly tripling. On the other hand, Pennsylvania's only increased 31 percent.
- Healthy, not wealthy: Healthcare spending has increased at one of the fastest rates since 2009, with average increases more than 30 percent. While older people (41-55) spend more than $300 each month, younger people saw the most dramatic increase. Their spending increased by more than 40 percent since the first three months of 2009. For example, 26-31 year olds' healthcare spending rose from $179 a month in the first quarter of 2009 to $252 a month so far this year.
- Growth in giving: Though overall spending has increased nine percent, a disproportionate amount of that is in gift giving and charitable donations, where Americans have become 47 percent more generous since 2009.
||More Consumers Dining Out on Sandwiches Boosts Category Growth
Almost half of sandwiches consumed last year were bought at restaurants rather than made at home, according to data released by Technomic.
Players like Subway have long capitalized on the trend, while others such as Jimmy John's, McAlister's Deli, Jason's Deli, Firehouse Subs, Jersey Mike's and even McDonald's and Panera are working to gain ground in a category that Technomic values at $27.7 billion.
That's a lot of bread.
According to the consultant's 2012 Sandwich Consumer Trend Report, sales in the sandwich category are up 4.8% since 2010. Yet sandwich consumption overall hasn't been gaining huge ground.
"Sandwiches themselves are not a growing category, they're a shifting category," said Harry Balzer, VP at NPD. Nearly half -- 49% -- of sandwiches consumed in 2012 were purchased at restaurants or other food-service locations, up from 44% in 2010, according to Technomic.
Millennials are propelling the category's growth as they seek fast, fresh and convenient meal options.
"Subway was just another chain until it started marketing (its food) as healthy," said Joel Cohen, a restaurant-marketing consultant. Subway's U.S. systemwide sales were up 6.1% to $12.1 billion in 2012, according to Technomic, while unit count was up 3.3% to 25,549.
McDonald's is tapping into the trend with McWrap, its biggest product rollout this year, since tortillas are the leading variety of "sandwich bread" in the limited-service category (which encompasses fast-food and fast-casual restaurants). Customization is by far more important to consumers than any other factor when it comes to sandwiches, according to Technomic.
Quiznos is not faring as well, posting U.S. sales of $838 million in 2012, down from $921.6 million in 2011, according to Technomic. It regrouped in mid-April and launched an ad campaign that delivers a quality message. "Quiznos is focusing on what differentiates us -- our unique recipes and quality ingredients," said Susan Lintonsmith, Quiznos' CMO.
One fast-growing sandwich chain is Jacksonville, Fla.-based Firehouse Subs, with 560 locations in 36 states. Its sales were up 33.5%, to $380 million, according to Technomic, while unit count jumped 19.3%. Doug Reifschneider, VP-marketing, said quality messaging and positioning have helped.
(Source: Advertising Age, 05/06/13)
||Hoteliers Gear Up for Busy Summer
If early indications ring true, it's going to be a busy summer for hotels across the U.S. as both families and business travelers are expected to hit the road in droves.
Several hoteliers reported to HotelNewsNow.com that advanced bookings are up dramatically year over year, backing up a new forecast by STR that predicts strong performance metrics for June, July and August.
Not only is demand up, but most hoteliers said pricing power has returned and they are finally able to push rate without experiencing consequential declines in occupancy.
According to STR, average occupancy at U.S. hotels for June, July and August combined is expected to be 70%, up 1% from last year. Average daily rate is expected to be $112.21, up 4.4% from 2012, and revenue per available room is expected to be $78.50, up 5.4% from 2012.
Preferred Hotel Group, a "soft brand" that provides sales, marketing and technology solutions to more than 600 independent and luxury hotels worldwide, is reporting the biggest boost. The company's North American portfolio has 27% more business on the books for June and 36% more in July than it did at this time last year, said Jonathan Newbury, VP of strategic development.
"As of May 4 we had already booked 73% of the amount of reservations as we did the entire month of May last year. That's same-store, like for like," Newbury said. "Obviously, we are very pleased about that."
Summer at the Crowne Plaza Hollywood Beach Resort in Hollywood, Florida, looks promising, too, according to GM Mike Long. Long said both transient and group demand are up compared with last year, and are even beginning to approach peak occupancy numbers from what he called the "golden years" of 2007 and 2008.
"The Crowne Plaza Hollywood Beach has put substantial marketing effort into increasing summer international business," he said. "We are increasing roomnights from Latin America -- Brazil, Argentina, Columbia, Peru and Chile -- Europe and especially the U.K."
Why so hot?
Hoteliers report several main factors leading to an increase in expected performance metrics. First, any incremental demand is especially meaningful in a period where supply growth has been virtually nonexistent.
"We are seeing the real effect of the collapse of the supply chain and new development across the board, particularly across America," Newbury said. "I think the demand is coming back strong, as is consumer confidence and business confidence."
Newbury also pointed to the recent record close of the Dow Jones Industrial Average, above 15,000 for the first time, as a factor that will have more businesses feeling comfortable about sending salespeople out on the road.
And, for Preferred, a target niche audience of older baby boomers is feeling more comfortable today than they were just four years ago that they will have enough savings to get out and travel.
"People are not only staying more, they're staying longer," Newbury said.
Pricing power returns
While occupancy is forecasted to be up slightly this June and July across Chesapeake Hospitality's 20-hotel management portfolio, the real movement will be in rate. Chesapeake Executive VP Joe Smith said advanced-booking rates are up 6% for transient leisure business.
Smith said the boost in ADR is partly because travelers feel more confident and are willing to spend more and partly because of a strategic effort by the hotels to push rate.
"I think over the past couple years the industry -- and rightly so -- has talked about leaving rate on the table and we've got to get back to pushing it," he said. "We believed that philosophy long before the past few years but sometimes competition forces your hands.
"From our perspective, we went into 2013 with budgeted rate increases," Smith continued. "We had an action plan to increase those prices and it's working. We had given direction that staying flat from a rate perspective wasn't going to fly."
At the Hilton Sandestin Beach Golf Resort & Spa in Miramar Beach, Florida, GM Gary Brielmayer said the hotel will be 95% full in the June, July and August months, as it typically is. Each year the hotel exceeds prior year ADR across those months, and this year will be no different, he said.
Rates continue to lag a little behind the 2007-2008 peak, said Long of the Crowne Plaza Hollywood, but rate growth is slowly catching up to occupancy demands.
"One of my hoteliers told me it's like someone turned the spigot back on," said Newbury of Preferred. "The hose is starting to fill with water. It's going to take a while to get back to the rate highs we saw in 2007 and 2008."
"Our occupancy, demand and revenue were at their highest in 2007 and 2008," said John Hernstat, director of sales and marketing at the Hyatt Regency Lake Tahoe Resort, Spa and Casino in Nevada. "Currently, we are only a few percentage points behind surpassing these figures for 2013."
Chesapeake has both group- and leisure-oriented hotels in its portfolio. The "group houses" are always the most wary going into each summer, Smith said, as summer demand is typically driven by leisure travel.
This year is no exception as group demand is faltering.
"Group is down all three months," Smith said. "Group occupancy will be less than last year unless something quickly happens to change that.
"Interestingly," he continued, "group rates are up about 6% for the summer. So while occupancy is down, our sales teams have been able to get additional dollars."
According to advanced-booking data from TravelClick, the transient segment is continuing to support both ADR and committed occupancy over the group segment in 2013.
In the 12 months from April 2013 to March 2014, overall committed occupancy for the transient segment is up 3% versus this time last year and ADR is showing a gain of 4.1%. However, the group segment is showing an occupancy increase of 1.9% and an ADR gain of 3.8% compared with this time last year.
Smith said in some of Chesapeake's markets, the hotels are impacted by the sequester and other government travel cutbacks. Those observations have fluctuated month to month, he said.
"I think we'll end up flat in occupancy for summer months over last year (combining group and transient)," he said. "Last year was a very good year so that's not necessarily bad.
"But we're seeing rates in both transient and group up," he added.
(Source: Hotel News Now, 05/09/13)
Daily Sales Tip: Prospect During Off-Peak Hours
The time of day you make your prospecting calls can have a major impact on your success.
Prospecting early in the morning or late in the day can be very productive. Decision-makers often work during off-peak hours. Gatekeepers may not work during those times.
Take full advantage of these unguarded moments. Successful prospecting doesn't follow a 9 AM to 5 PM day. You must put in extra effort if you want to be successful. Calling prospects at unconventional times sends a clear message to the prospect. It says you're dedicated to your work, your company and your product.
Source: Sales consultant Paul S. Goldner