Walt Disney Co. is pulling out all the stops to lure vacationers to its over-priced resorts this summer and fall. According to a story in the Orlando Business Journal, the company is giving away meals at theme parks to some travelers who visit between Aug. 16 and Oct. 3. Customers who buy a five-night, six-day room and park ticket package also get one quick-service meal, one snack and one table-service meal for each night of the package.
While guests pay a lot of dough to stay at a Disney park for a week, the promotion will take a little of the sting out of that cost. It also shows Disney’s desperation as they anticipate a soft summer season and an even-softer shoulder period in early fall. It’s always a gamble to discount, but this one probably makes a lot of sense. And it’s a good deal for customers.

A quick follow up to Ed’s post from a couple days ago on bankruptcies…
The news coming out of Las Vegas and MGM Mirage doesn’t look good. The Wall Street Journal reported today that the $8.6-billion development could be preparing for a bankruptcy filing, according to the paper’s sources. The story says MGM Mirage and partner Dubai World are struggling to come up with a $220 million payment. Dubai World earlier this week sued MGM Mirage for raising doubts about the its viability going forward with the project.
So CityCenter could be filing in days and MGM Mirage might not be that far behind? That can’t be good for the future of Las Vegas and the Strip.

Back in the 1980s, the New York Palace Hotel (then known as the Helmsley Palace) was the home of the Queen of Mean, the truly despicable Leona Helmsley. It seems as though some of her meanness still lurks in the hallways of the 893-room luxury property in Manhattan. According to a story in today’s New York Daily News, the hotel’s managing director got fired on Monday for ordering a Catholic employee to remove the ashes from his forehead on Ash Wednesday. The story quotes the manager, Niklaus Leuenberger as telling the employee, “Wipe that f—–g s–t off your face.”
The incident drips with both disgust and irony. Disgust, of course, that a hotel manager (or any executive) would be so stupid and insensitive to make such a remark. Irony, on the other hand, comes from the property’s history, as those were the kind of remarks Leona was known for during her reign as head of Helmsley Hotels before she was sent to prison for 19 months for tax evasion. (She died in 2007.) I interviewed her several times at the hotel, and both times she interrupted the interview to scold some underling for a petty offense. Part of it was her inherent meanness. The rest was her showing a reporter that she was a tough broad. Like I was impressed. Hah!
Further irony comes from the fact that the hotel leases its land from the Catholic Church and is located across the street from St. Patrick’s Cathedral.
I assume, of course, this is an isolated case and other managers wouldn’t be so ignorant or callous to make similar remarks mocking someone’s religion. I hope we’re past that as a society and an industry.

As the recession deepens and lingers, and the hospitality industry continues to suffer disproportionately to other segments of the economy, we’re bound to see a growing number of bankruptcies in the coming months among hotel companies of all sizes.

Not surprisingly, one of the first is a Las Vegas operator, Herbst Gaming, which cashed in its chips this past Sunday through a prepackaged Chapter 11 filing. The company, which operates 15 casinos in Nevada, Iowa and Missouri, came to terms with its creditors over $847 million in debt. The company’s casinos stay open under the plan.

More alarming is news that MGM Mirage is facing default on $7 billion in loans and the mounting concern over the company’s ability to complete the $9.1-billion CityCenter project that’s in the home stretch and due to open in December. Its joint-venture partner in that Strip project that combines hotels, casinos, residential and retail filed suit on Monday to be “relieved” on its obligations in the project. Infinity World, a subsidiary of Dubai World, says MGM breached its joint-venture agreement when it declared in a recent SEC filing that there is “substantial doubt” about its ability to continue as a going concern. That’s a very dire scenario, one that MGM will undoubtedly have a tough time overcoming.

The company is not without options, however. One is to sell off some of its assets, a process that already started with the recent agreement to sell Treasure Island, one of its 10 Strip properties, for $775 million to Phil Ruffin, former owner of the Frontier. Analysts believe the company may also try to sell some vacant Strip land it owns or even a piece of the CityCenter project. Total failure of MGM Mirage would strike a serious blow to the reputation of other casino-hotel companies and all of Las Vegas.

A similar story is brewing in the traditional hotel segment. Atlanta-based Lodgian, owner and operator of 40 branded properties, is facing a $128-million loan that’s coming due in July. Lodgian also admitted in a recent SEC filing that doubts exist about its ability to continue operating.

Unless there’s a rapid turnaround in the health of the economy, these three examples are probably the tip of the iceberg. I’m guessing that at least a few household-name companies are in similar pickles and are scrambling to meet their debt obligations or to rework loan terms. Beyond that, there may be scores or more of mid-size or smaller owner and/or operator companies that may wind up in bankruptcy court this year or next.

And while this kind of news isn’t good for the industry as a whole—and, of course, these companies in particular—it also creates numerous opportunities for well-capitalized companies, funds and individuals looking to do some bargain hunting.

No matter what, the hotel industry landscape will look completely different this time next year.

A recent story at Bloomberg.com reported several hotel execs were upset with Congress and its hypocrisy related to luxury travel. After coming down hard on corporations for what it deemed excess, the Democratic and Republican Senatorial Campaign Committees held meetings at popular resorts in Florida.
Certainly Congress, and the mainstream media, need to back off the rhetoric over luxury travel and corporate meetings, but I’d be leery of backing Congress in a corner over this issue. Does anyone really want to force Christopher Dodd or any other big-name senator to publicly admit the meetings were a mistake and they shouldn’t have held them, and wouldn’t do the same in the future? The public is frothing over the perceived waste by companies and it’s not like politicians haven’t been known to grandstand before, so why push them into a position where they might make another statement against this perceived “excess,” which in reality, is actually integral to the U.S. economy and its recovery. We need people spending, traveling and meeting, a point Stephen Rushmore recently made here.

A couple recent stories from newspapers have added some new names to the speculation on who could be interested in buying the Greenbrier. A Charleston (WV) Gazette story last week menioned luminaries like MGM Mirage, Four Seasons, Ritz-Carlton, Marriott and Donald Trump. A former football player, Hall of Famer Sam Huff, has Marriott connections and believes the company would make sense as a management option if private investors bought the venerable resort. He mentions fellow West Virginian Jerry West, an NBA Hall of Famer, as potentially part of an investment group.
A story today from the Seattle Times reports West Virginia Gov. Joe Manchin recently spoke to Trump about the resort.
A football legend, the Lakers owner, the governor…who will next tout the resort? I’d come up with a projected guess, but are there really any other famous West Virginians left (I can get away with that, I lived there for a few years…).

While hope may not be a sound business strategy, there’s a lot of optimism floating through the Hunter Hotel Investment Conference underway this week in Atlanta. While few of the 700-or-so attendees believe a turnaround in either the economy or hotel business is around the corner, most see a glimmer of light at the end of the tunnel. The bad news, of course, is the tunnel may be very long and full recovery may not occur until next year or even 2011.
But that’s the nature of the Hunter Conference, which founder Bob Hunter calls a meeting for “Main Street, not Wall Street.” The entrepreneurs meeting in Atlanta this week aren’t willing to just roll over and wait out the recession. They firmly believe they can collectively or even individually will the industry back to prosperity. Obviously, the forces at work are way beyond their control, but healthy doses of confidence—along with solid strategies to minimize the effects of the downturn—will mitigate the effects of the crisis. Nearly every owner, developer or operator I spoke with has an action plan to take full advantage of the turn in the market. Those plans range from acquiring properties to developoing new, but the common thread is a plan for the future.
There’s no moping, hand-wringing or blame-placing; just calculated and rational plans for prosperity. That’s what they do on Main Street.

The Employee Free Choice Act was introduced Tuesday in both houses of Congress (for the news story), this time with more support than three previous efforts thanks to larger Democratic majorities and President Obama. Card Check, as its commonly called, was target No. 1 to AH&LA and the hotel industry, at least until the recent wave of anti-meetings rhetoric coming from the new administration and mainstream media. It didn’t take AH&LA long to respond to the latest version of EFCA. On Wednesday, a release was issued, staunchly and firmly against the proposed legislation.
“Small hotels will suffer disproportionately if this bill passes,” said Joe Martin, AH&LA chairman and owner of Stillwater Hospitality, which operates two hotels in Oklahoma. “They have never been subject to intense union organizing pressure, and will face increased costs if their facilities are unionized. Those increased costs can mean the difference between hiring new workers or cutting their labor costs to break even.”

I’ve finally realized how serious is this recession: Forbes magazine yesterday reported that both Marriott chief Bill Marriott and his brother, Richard, are among 355 people who dropped off its list of billionaires in the world. Last year, 1,125 people—mostly captains of industry but also a few trust fund babies—were among the exclusive group.
But don’t worry, and don’t think about taking up a collection for the Marriott brothers. Although each of them lost $1.1 billion in the past year (mostly on the 61-percent drop in the price of Marriott International stock), they still have about $600 million a piece to pay the mortgage and put food on the table. Both of them had been in Forbes’ billionaire club since 2001.

What was Mike Leven thinking when earlier this week he accepted the job as president and COO of Las Vegas Sands? I have more respect for Mike than just about anyone I’ve known in my years covering the hotel business, but seriously Mike, what are you thinking?
Las Vegas is probably suffering the worst of any market during the current industry downturn, and Mike’s new company owns and runs three high-profile properties there—The Venetian, The Palazzo and the Sands Expo & Convention Center—that must be hurting especially bad through these depressed times. Gaming revenues on the Strip dropped 15 percent in January after a horrible 2008, the number of visitors to the city is expected to drop by four percent this year, more than 13,000 new rooms will open in ’09, and the entire city is in a rate war. No wonder, Las Vegas Sands has lost 98 percent of its stock value in the past 52 weeks.
And while Mike is a marketing and operations genius, nearly his entire career has been in the mid-market and economy segments of the hotel industry (Holiday Inn, Days Inn, US Franchise Systems), much different animals than the casino hotel business. Perhaps most disturbing, however, is that Mike will be working for Sheldon Adelson, the firm’s volatile and much-maligned chairman and largest (along with his wife) shareholder. Mike got the job following Adelson’s very public and ongoing feud with William Weidner, the former president and COO, a 14-year veteran of the company and one of the most experienced casino executives in Las Vegas. Mike will have his hands full with Adelson.
Despite my misgivings, there’s always a chance this move will pay off for Mike. (I’m sure it will financially, at least.) Mike has been on the company’s board of directors since 2004 so he should have a clear understanding of its inner workings, as well as its strengths and challenges. He’s also a brilliant strategist and a smooth and talented leader who’s always been able to get the most out of his people. And at one time, Mike worked for and thrived under Henry Silverman, who in terms of arrogance and ego might make Adelson look like Mother Theresa.
Either way, I wish Mike luck in his new job and hope he doesn’t roll craps.