Archive for January, 2007

Is the U.S. hotel market tapped out?

No wonder U.S. hotel companies are scrambling to develop properties outside this country: Despite political volatility and more, performance data for 2006 shows double-digit growth in RevPAR for hotels in Asia, Central and South America, Europe and the Middle East.

According to a recent HotelBenchmark survey by Deloitte, the Middle East led the way for the third consecutive year, posting RevPAR growth of 16.5 percent; despite terrorist activity and other political unrest in the region, ADR there grew 17.8 percent to $142.

In Central and South America, RevPAR growth was 13 percent, and ADR grew 12.3 percent to $122. In Europe, RevPAR grew by 12 percent to $102, almost double the growth achieved in 2005, Deloitte reports. Part of the reason was special events such as the Winter Olympics in Italy and the Americas Cup in Spain.

Even in Asia Pacific, which experienced earthquakes, terrorist attacks and bomb explosions, RevPAR grew 11 percent; in India, RevPAR shot up 30 percent. Deloitte has called India “one of the leading stars in the hotel industry.”

Meanwhile, PricewaterhouseCoopers has pegged RevPAR growth in U.S. hotels at 8 percent in 2006. This country hasn’t been attacked in more than five years, it’s relatively peaceful and earthquakes are rare here. Maybe it should do more to draw international travelers—something other countries seem to do well despite long odds.

Tax tips on tap

Hospitality property owners and managers are always looking for ways to save money. One way to do so is to pay attention to tax details particular to the business owner. Here are a few tips to keep in mind, courtesy of Grant Thornton’s Construction Real Estate and Hospitality Industry Group. For more tax tips, go to www.grantthornton.com/taxtips or email CRH@gt.com.

1.    Review The Pension Protection Act of 2006.  The Act introduces major changes to previous pension rules, with a primary focus on more stringent funding requirements for defined benefit plans and permitting the use of automatic enrollment in 401(k) plans. It also includes several significant tax incentives and retirement savings for your employees by making existing rules permanent.  In addition, important changes are made to charitable giving, including a new provision allowing tax-free distributions from IRAs for charitable purposes.

2.    Assess tax credit potential.  Your tax professional can inform you of specific tax credits that may be relevant to your business. For example, the tip credit and certain general business credits, such as the welfare-to-work credit and the work opportunity tax credit, can provide significant tax savings for the hospitality industry.

3.    Consider establishing a separate entity to own and lease fixed assets used in your business.  Often referred to as “leasing companies” or “procurement companies,” these entities can help manage your assets and may significantly reduce your sales and use tax – a tax you collect and remit regardless of whether your company is profitable.

4.    Determine if your company has overpaid sales and use taxes.  Most companies pay a substantial amount of money to suppliers and state tax agencies, but often overlook potential sales and use tax exemptions.  You may be eligible to file a refund claim to recover losses and put a system in place to prevent future overpayments.

5.    Consider expensing versus capitalizing repairs.  You may be able to deduct the cost of certain repairs made to your property, depending on the type of property and the effect of the repair upon the property.

Bill the blogger

I must admit I thought it was the sign of the apocalypse when I read yesterday that Bill Marriott had launched a blog. Bill is the consummate old-school hotel executive and one of the last people I thought would step into the world of web communications. And, in fact, he used part of his initial message to retell the oft-told tale of how his parents opened a root beer stand in the 1920s as the launch of the Marriott empire.

But, perhaps unexpectedly, his entry had a few surprises in it, both personal and professional. Mr. Marriott says he wants to use the blog as a way to talk to customers directly and to listen to what they have to say. For Bill, it’s really an extension of what he does best, but now he can augment it electronically. He says he visits more than 250 properties a year to talk with both employees and guests. He’s now able to extend his reach.

Bill says that he’ll periodically use the blog to vent his opinions on current events, including some of his pet issues, such as immigration reform. He promises to be controversial from time to time.

An admitted techno-phobe, Bill says in recent years he’s become more comfortable with technology and now even has an iPod. I’d love to get a glimpse at his music list.

I applaud Mr. Marriott for taking this step, even tentatively, into the blogosphere. It’s where his guests are and where he should be, too. Check it out at www.blogs.marriott.com.

For sale: 10,577 ashtrays

The two groups suffer that most when hotels institute no-smoking policies are smokers (naturally) and manufacturers of ashtrays. That point hit home as I scanned a press release yesterday from Gaylord Hotels announcing that its three existing hotels and one property under development will soon be smoke free.

And in a bit of cause-related marketing, the company says it will use eBay to auction off the 10,577 ashtrays it has left over. Proceeds will go to the American Lung Association. Nice touch.

Crazy indeed

I usually don’t tout other blogs, but I recently found one that’s at times amusing and other times disturbing. It’s called Crazy Hotel Workers and it can be found at http://community.livejournal.com/hotel_workers.

The site is basically a place where hotel workers—mostly front desk agents—can bitch about customers, managers and at times, other workers. Here is an example of a post today about a type of guest anyone in the hotel industry has run across during their career:

“So this sweaty troll is at the desk, practically foaming at the mouth with rage. She’s been out all afternoon and returns to discover that the Slim-Fast she left in her room fridge is still not cold. And how DARE we charge $3 per day to use it when it clearly does not work. Huh? I thought fridges were only by request. ‘M’mam. Did you request a fridge in your room?’
troll: I don’t have time for your stupid questions. It’s the fridge in the closet, bolted to the floor.
me: I’m awfully sorry, but our room SAFES aren’t designed to chill your diet shakes.”

Check it out. You’ll get a good laugh.

Design do’s and don’ts

Hotel guestroom design, for the most part, just gets better. I love today’s carefully considered amenities, easy-to-use technology, clean lines and touches of whimsy. But bad design in some form will always be with us. I abhor clutter, poor lighting and lack of bathroom counter space. Here’s a list of some current design yeahs and nays:

Hooray for…
∑ Casters on furnishings. It’s great being able to maneuver a desk or table for work or better TV viewing.
∑ Padded headboards
∑ Flexible wall-mounted bedside lighting
∑ Big magnified makeup mirrors
∑ Roomy bathroom countertops
∑ Nightlights
∑ Stainless steel coffee carafes (it’s time to nix the fragile glass pots)
∑ Big button, easy-use clock radios
∑ Framed photography that conveys a sense of place
∑ Full length dressing area mirrors

Lose the…
∑ Bed scarves. Do they serve a purpose?
∑ Superfluous pillows and bolsters. Like the bed scarves, they usually end up on the floor.
∑ Silly graphics. What’s with this trend towards cutesy contrived sayings such as “wash” “think” and “eat” “relax” (plastered on soap wrappers, pencils, food covers, pillows)?
∑ Mountains of promotional literature. Pamphlets and table tents spread around the room conveys cheap and cluttered.
∑ Dusty and dated silk flower arrangements
∑ Bulky armoires and tubby tube tvs
∑ Low-to-the-floor platform beds
∑ Pedestal bathroom sinks—pretty but pretty useless. No place to store one’s stuff.
∑ Hair dryers hidden in storage bags—I like mine mounted on the wall within easy view and reach.

Those are a few of my faves and pet peeves. What design elements do you applaud and/or boo?

Flunking Foreign Affairs 101

Hilton Hotel Corp. is in trouble in Norway for refusing to book rooms for a Cuban delegation at an Oslo hotel. How Hilton handles the situation will speak volumes about its attitude toward hospitality, not to mention diplomacy.

The Associated Press says the delegation was scheduled to attend a travel fair in Oslo this month and planned to stay at the Scandic Edderkoppen Hotel in the city center, as it had on five previous visits. But that was then, before Hilton bought the 140-hotel Scandic group last March. Now, Hilton says, it has to abide by U.S. law, which bars U.S. companies from doing business with Cuba.

That could be costly both in terms of money and foreign relations: Scandic’s refusal to accommodate the Cubans has prompted protests and a police complaint. In addition, the 300,000-member Norwegian Union of Municipal and General Employees has decided to boycott all Scandic hotels in Norway, and the country’s strongest labor force, the 830,000-member Norwegian Confederation of Trade Unions, wants the government to bar Scandic, which that union says abides by the “United States’ illegal boycott and blockade and not Norwegian law,” from doing business in Norway. Word is the government is considering opening a case against Scandic.

Perhaps now that the Democratic Party is in charge of Congress, it can take steps to kill the Cuban embargo, a Cold War relic that perpetuates fossilized attitudes and partisan politics. Hilton says it’s bound by U.S. law. It’s time for Hilton to challenge that and come down on the side of reason, business sense and diplomatic savvy.

The thin line before crisis

The line between success and crisis can at times be very thin. Just ask the owner, managers and employees of the Doubletree Grand Key Resort in Key West, FL. Just a few weeks ago, the property was bracing itself for the beginning of another busy winter season. With just 6,600 hotel rooms, a reputation as a party town and a frost-free winter climate, the Southernmost U.S. City is generally jam-packed with tourists.

On Dec. 27, that all changed for the Doubletree and to a lesser extent, the entire Key West tourism economy. On that day, a guest in the property was found dead and another rushed to the hospital. Cause of death was carbon dioxide poisoning from a faulty boiler. State officials immediately yanked the property’s certificate of occupancy for at least 90 days, or as long as it takes to fix the problem and rid the building of the noxious fumes. Now, charges are flying and lawsuits are in the works over the property’s installation of the boiler, allegedly without the proper permits and inspections.

Bottom line: The property’s lucrative winter business is down the drain to the tune of about $3 million lost. And the incident is having an impact on the city’s entire tourism business. In addition to the 216 rooms in the Doubletree, the town lost another 729 rooms due to redevelopment to other uses, primarily condos. That leaves a shortage of rooms during the peak season, resulting in a loss of occupancy taxes and ancillary business for restaurants, retail, etc. Also, there may be residual PR damage to Key West’s reputation as a tourist destination.

The entire sad and regrettable incident shows how vulnerable businesses are to disasters natural and man-made and that someone else’s actions, even innocent ones, can dramatically affect you and your business.

The booze business

I always knew the nightclub business was lucrative, but I didn’t know how much until I read an item in this morning’s Norm Clarke column in the Las Vegas Review-Journal. According to the eye-patched gossipmonger in Sin City, Pure, the nightclub in Caesars Palace, grossed $2.1 million on New Year’s Eve. Pop star/professional celebrity Britney Spears hosted an event at the club that night that attracted 3,000 revelers who each paid $300 to say they partied with Brit. The rest of the revenues came from VIP bottle service, bar sales, after-midnight admissions and a high roller who paid $50,000 to get a table next to Spears in the club’s VIP section.

Apparently, this isn’t an isolated thing in Las Vegas. According to Clarke, Steve Wynn says the Tryst nightclub in the Wynn Las Vegas grossed $33 million in 2006, making it what Wynn calls “the single most successful nightclub in America.”

Hard to argue with those numbers.