Archive for October 11th, 2006

Maintaining global harmony

Stevan Porter, the smooth, gregarious president of the Americas region of InterContinental Hotels Group, certainly has nothing against border security. But he also doesn’t want security concerns to trump international relations, a risk he and others suggest that the Bush administration is taking with the Western Hemisphere Travel Initiative (WHTI).

Porter, who made a point of praising Canadian hospitality during the recent InterContinental Americas Investors & Leadership Conference in cosmopolitan Toronto, endorses “the notion of border security,” he says. But he wants “to slow the train a little bit” so as to develop “globally agreed-upon documentation that solves the citizenship question.”

Good move, and good that Democratic Senator Patrick Leahy of Vermont and Republican Senator Ted Stevens of Alaska have slowed the train a bit. In July, the Senate approved a Stevens-Leahy amendment that postpones until June 2009 stiff new border-crossing requirements. Leahy—and various Canadian officials—say the PASS Card system would lead to major disruptions in commerce, tourism and travel.

The PASS Card is part of the Western Hemisphere Travel Initiative, a push from the Departments of Homeland Security and State. Among WHTI requirements are a demand that individuals from the Americas, the Caribbean, Bermuda, Canada and Mexico present a passport or other documents proving citizenship before entering the U.S. As proposed by Homeland Security and State, a PASS Card about the size of a driver’s license would be developed to provide an alternative to a passport. But the two agencies haven’t agreed on the card’s technical requirements and, Leahy claims, haven’t coordinated with their counterparts in Canada and Mexico.

According to the Homeland Security website, the WHTI will by Dec. 31, 2007 require all travelers to and from the Americas, the Caribbean, Bermuda, Canada and Mexico to show a passport or other proof of citizenship (like an original copy of a birth certificate) at the U.S. border.

IHG’s Porter says he doesn’t know what kind of technology could provide a universally recognized and accepted proof citizenship that is easily processed. But he’ll continue to raise the issue, befitting the head of a giant hotel brand that’s ever more globally oriented.

The $1 million guestroom

To show you how long I’ve been in this business, I distinctly remember back in the 1970s (or maybe it was the ’80s; I told you I’m old) when our then Finance Editor, the late Steve Brener, wrote a controversial column in which he forecast the imminent arrival of the $100-a-night hotel room. At that time, even rooms in New York City were renting for only $70 or $75 a night, but Brener correctly forecast a day when top-tier properties in Manhattan and elsewhere would crack the $100 barrier. Obviously, he was correct and today it’s nearly impossible to get a room in New York for even $300 a night.

The industry cracked another barrier recently that many thought would never be broken: the $1 million guestroom. Related Cos. recently sold its W Union Square property in New York for more than $1 million per key to Dubai-based Istithmar. (More precisely, the 270-unit hotel sold for $285 million, or $1,055,555 per room.) And while the property has been wildly successful since it opened in 2000, it’s hard to imagine the economics of any hotel to justify that kind of price tag. After all, using an old hotel business rule of thumb, that W should command an ADR of $1,055 to match its selling price. Even in Manhattan, that won’t happen for awhile, but this example highlights the new economics of the hotel business.

In fact, the W Union Square, like many hotels in NYC and elsewhere, is much more than a hotel; one could say it’s really a bar, restaurant and hip gathering place that also happens to rent 270 rooms on the side. Simply put, f&b, catering and other revenues are so important for a property such as this that its million-dollar guestroom status is probably justified. Even my old friend Steve Brener would have a hard time visualizing this scenario.