MGM Mirage and Deutsche Bank may be in discussions that would give the casino company added financing to finish the nearly $9-billion CityCenter project, if the Las Vegas Journal-Review’s sources are correct. The story earlier this week said a deal was still far apart, but the basics of it would be MGM Mirage getting $700 million from Deutsche and the keys to operate the neighboring Cosmopolitan project the bank recently bought at a foreclosure sale for $1 billion. Or, MGM would take over the project and Deutsche would get a piece of CityCenter.

The Cosmopolitan, a $3.9 billion project including a casino, resort and condos, is scheduled to open next year. A website, under construction like the property itself, doesn’t offer any more info.

Accor SA’s chairman and five other directors quit in an apparent tiff over some shareholders’ plan to combine the chairman role wtih that of CEO Gilles Pelisson, according to a story today from Bloomberg. I’m not too familiar with the makeup of the French company, but this is an interesting read.

I met Pelisson, now the chairman and CEO, in San Diego at ALIS, but I was unaware he was the nephew of the founder of the company. Apparently a prelude to this current clash happened in 2006 when Gerard Pelisson wanted to install Gilles as the sole head of the company.

No idea what this means to Accor NA, Motel 6 and Studio 6. I doubt much in the near-term, though.

Smith Travel Research released its January numbers and the news wasn’t good. Occupancy fell 10.7 percent from a year ago, ADR 5.2 percent and RevPAR 15.3 percent. D.C. was the only market to post increases—thanks to the inauguration—in those three categories. Detroit’s occupancy fell 18.9 percent, New York City’s ADR dropped 13.1 percent and those two cities, along with Phoenix, suffered RevPAR declines over 25 percent. The luxury segment, not surprisingly, was hit the hardest (23.3 percent drop in RevPAR).

Those seem to be worse numbers than were projected by many analysts, although January ‘08 wasn’t a horrible month, as I recall. So maybe that’s partly the reason, that a really bad month compared to a pretty good month is going to show significant declines. Although it won’t be any more reassuring to compare a really bad month (like toward the end of last year) to another really bad month (if this freefall continues). The change, year vs. year, may look better, but the actual results will hurt just as much.

After the recent news of delays to the Harmon Hotel & Spa, it’s got to be a good sign that the ARIA Resort & Casino and Vdara Hotel are now taking reservations. Vdara, the non-casino hotel, is scheduled to open Oct. 1 and has nightly rates from $159-$2,000, according to a Las Vegas Sun story. ARIA’s rates go from $179 to $799. The majority of the nearly $9-billion-project is slated to open in December.

In early January, the condo component to the Harmon Hotel was scrapped and the hotel’s opening was pushed back until 2010.

The hospitality industry is facing a bigger threat than even the recession, credit crunch and weak consumer confidence. It’s the growing misperception that travel, and particularly luxury travel and corporate meetings and conventions, is anti-American and detrimental to the nation’s economy. In fact, this wrong-headed notion that businesses shouldn’t be spending their resources on any kind of corporate gatherings has been codified in the $787-billion economic stimulus package passed last week by Congress. That bill includes specific limitations on business travel by companies in line to receive stimulus funds.
But the problem goes beyond anything Congress mandates. Many companies, even those not likely to receive any emergency assistance funds, fear the adverse publicity scheduling any kind of meeting in a hotel could bring. Particularly hurt are any properties perceived as luxury or any with the words “resort” or “spa” in their names. Las Vegas, too, has taken it on the chin: according to a story in Sunday’s New York Times, in the last month 30,000 roomnights connected to conferences have cancelled at a loss to the city of $20 million. So wary are companies of Las Vegas’ reputation as a party town that at one firm, Goldman Sachs, paid a $600,000 cancellation fee and moved a technology conference to San Francisco, a more expensive city in which to meet.
The industry is trying to fight back, but with little success. Loews Corp. CEO James Tisch complained in a Bloomberg story published before Congress’ vote on the stimulus package that lawmakers are “killing the resort business.” And Marriott Chairman Bill Marriott wrote in his blog that everyone, from housekeepers to CEOs, get hurt when America stops traveling.
You can do your part by telling anyone who will listen—the news media, politicians, members of your local chamber of commerce—how vital and pro-American it is for groups and individuals to travel and to meet. Unless we can change perceptions, these anti-travel sentiments could hurt our industry long after the economic climate improves.

I had the chance to ask Wayne Golderg, CEO of La Quinta, if he regretted the timing, cost or perception of this conference in Hawaii. His answer was a simple “no.” He said having it now was more important than ever and admitted the company did consider cancelling it. It sounded as if not having one next year was a painful, but “prudent” decision. Goldberg said he considered a scaled-back version, but skipping a year and continuing with the same efforts and intensity made more sense. He said he thought some companies were canceling events now because of perceptions and not realities, and that’s what he wanted to avoid.
Some other quick insights gleaned from a lunch with LQ’s top execs:
* Attendees were excited to have more free time built into the program and rather than a planned meal on the third night of the conference, LQ gave everyone a $75 prepaid credit card for food and fun. The total spend was around $75,000 ($75×1,000 attendees, roughly), but was much less than what an organized dinner for 1,000 would have cost. And this option was a rousing success, from what they said, and what I heard from attendees. “Perceived value,” Goldberg said.
* Golderg said despite the positive approach the company was taking, it was not ignoring the reality of the economy: “It’s a challenge, but we’re working hard to come out of this ”Bigger, Better, Faster, Stronger’ when the cycle turns.”
* EVP of Franchising and new Chief Development Officer Raj Trivedi said there was no timetable for reaching 1,000 properties; if it comes in three months or three years, it doesn’t matter: “Whenever we find the right properties and franchisees.”
* Chief Marketing Officer Julie Cary said the goal of the advertising campaign was to be different like Geico, get people talking and put heads in beds: “Innovation sells product” and being different is important. Cary and Goldberg talked about the addition of planned July and August advertising, when occupancy is typically high and ad spend isn’t needed, as a way to overcome lagging business.
* Angelo Lombardi, chief operating officer, followed up Cary’s talk and said if she gets them in the door, he and Raj would keep them, emphasizing the importance of the repeat guest.
* Golderg also detailed the formation of La Quinta’s new brand council, which replaced the franchise advisory council and other operational groups, and would be unique in the industry. The council includes 14 members, coming from the executive team, franchise owners and GMs, GMs from corporate-owned properties and other corporate employees. It will meet three times a year and the first meeting was last week here in Hawaii. Many others from those above groups will be invited to the annual meetings depending on the topics being discussed. Goldberg and Lombardi talked about how having so much “skin in the game” made them more sensitive to franchise owners and this collaborative effort would move the brand forward.

Another quick thought on what La Quinta has done extremely well with a mix of irony.

The ukulele ensemble record attempt was corny, but it was also fun and earned La Quinta some great free exposure. Of course I’m writing about it, as well as most of the hotel trade press I’m sure, but I also saw a news story on a local TV station and a story in the Honolulu Advertiser. The idea came from Teresa Ferguson, the company’s director of communications and public relations. It just goes to show how a good idea can be a great way to grab some free exposure, something most companies are certainly looking for as they cut marketing and advertising dollars. Part of the genius was tying the effort into the local culture and finding a local celebrity to take part.

On a different note, it’s both funny or sad that we, as an industry, continue to talk about how important it is for companies to travel and plan meetings and events and hotel companies are now slashing travel and annual conventions (LQ isn’t the first and likely not the last). I understand and am not advocating wasteful spending, but it’s ironic that the very thing that’s hurting the industry is something those in the industry are forced to do as well. I wonder if La Quinta regrets this lavish location and its pricetag?

I’ve had little opportunity to work with or cover La Quinta in my time with Lodging Hospitality, but I must say I’ve been very impressed with the company and brand at its annual convention here in Oahu. First off, you can’t beat the location, at least coming from somewhere like Cleveland. But more impressively is the company’s vibrant, fun and optimistic personality, which I think comes directly from CEO Wayne Goldberg.

I don’t think I’ve seen one exec, franchisee or corporate employee wearing a coat and tie (and I’ve seen more wearing swimsuits than I think I’d prefer) and that’s indicative of the laid-back corporate culture with LQ. Sure, we’re in Hawaii, but I bet many other companies would have at least one formal affair during an event like this, and certainly some execs would be hard-pressed to leave the dress suits at home and bring the swim version.

It’s not that Goldberg or the company are oblivious to what’s going on in the industry and economy around them, it’s just they’re confident they can and will survive, and maybe even thrive. I think they believe–and rightfully so, in my opinion–that by presenting a confident outlook and by keeping employees and franchisees loose and happy they’ll get the most from them. Isn’t there an expression about a happy employee being a productive employee? If not, there should be…

Writing the Motel 6 story earlier this week made me recall a conversation I had with Accor CEO Gilles Pelisson and Accor North America CEO Olivier Poirot at last month’s Americas Lodging Investment Summit. The Motel 6 in Biloxi was Accor’s 1,000th Motel 6/Studio 6 property to open, but 95 percent of those are Motel 6s. The two execs said a major focus this year and beyond would be growing Studio 6, the company’s economy extended-stay brand.
What was interesting was both admitted they might be interested in purchasing a smaller chain or regional player with a handful of properties to grow the brand. Interestingly enough, 75 percent of the current portfolio, they said, was made up of former Homestead Studio Suites, one of Extended Stay America’s current brands. ESA was rumored to be in in trouble in December (see here), but nothing further has developed. The Accor execs were clear they wouldn’t be interested in the entire chain or a huge chunk of ESA if it became available, but if there were regional batches of Homestead properties available, it might be enticing.

The “AIG Effect” continues to impact companies and their travel plans and ultimately the hotel industry is the one hurt the most. An interesting story in today’s New York Times discusses the difference between a legitimate business event and an extravagant party, and how blurry those lines can be. Corporate America is pulling back on both to avoid the perception of lavish spending during these tough times.
The latest company under the microscope is Wells Fargo, which like AIG received billions in federal bailout money, but unlike AIG, it canceled upcoming plans for a recognition event at the Wynn Las Vegas and Encore after news of the meeting received plenty of bad press. The company went on to cancel all recognition events this year, according to the Times story, which isn’t good news for event planners, hotels and resorts.
The spotlight even shined on government as Democrats in Congress attended their annual retreat at Kingsmill Resort & Spa in Williamsburg, VA and Republicans headed to Homestead in Hot Springs, WV. Some watchdog groups, according to an Orlando Sentinel story, are questioning the luxurious locations.
And there’s more. After my original post, I saw a comment from James Tisch, CEO of Loews, echo the same thoughts in this story. The money quote from there: “Congress has done a great job of killing the resort hotel business with the way they’ve criticized a number of financial firms for having conferences,” Tisch told analysts. “I just heard this morning of another investor conference that was canceled by another major investment firm because of fear of being criticized by members of Congress.”