The hotel industry is suffering from a serious case of schizophrenia, at least from the talk at this week’s Midwest Lodging Investors Summit in Chicago. Speakers at the second annual conference, sponsored by Lodging Hospitality, agreed that rate cutting is bad, but they all admit they do it. Financing for acquisitions and new development is available, some said, but few knew where to find it. When will the current hotel industry downturn subside? No one had a definitive answer.
The opening general sessions featured a lively debate over rate discounting, among other topics. The realists agree that it’s a current fact of life. The dreamers believe operators can still hold the line on rates, no matter what the competition does.
“Rate cutting won’t increase traffic to your hotel, and the press needs to pound home the message that you need to hold rates by delivering value and increasing service,” said Nancy Johnson, EVP and chief development officer of Carlson Hotels, who added that “just across-the-board rate cutting by a a factor of X is wrong.”
Walter Isenberg, president & CEO of Sage Hospitality, disagreed, calling Johnson’s remarks “totally unrealistic. It’s the nature of the business,” he said. “In this part of the cycle, power shifts from the hotels to the customers.”
The other big question is availability of financing. While many speakers and attendees claim none or much is available, Joe Epstein of First American Realty Associates said, “There is more money available to finance hotels today than there was in 1986 or 1996. Of course, borrowers have a choice: Do it their [the lenders] way or there are no loans. That means borrowers need to post personal guarantees, put real cash into the deal and don’t expect leverages of more than 50 to 70 percent.”

An Associated Press story today reports TripAdvisor has been posting disclaimers warning of fake reviews.
So you mean all those glowing reviews might not be completely legit? Or that hatchet job might have been written by the hotel across the street? Stop the presses!
This has been going on since sites like TripAdvisor began and even the site acknowledges they’ve posted warnings since 2006. A good hotel monitors its reviews, but doesn’t manipulate its reviews. Sometimes that’s easier said than done.

According to company lore, Marriott International was built on a simple philosophy from founder J. Willard Marriott: Take care of the associates and they’ll take care of the guests. That easy-to-say, hard-to-do sentiment is still the foundation for the firm more than 80 years after its launch. Bill Marriott, son of the founder and living hotel legend, last week showed he can walk the walk, too.
In his entertaining and insightful blog, Marriott announced that all of the company’s full-time employees will still receive their health care benefits, even if they’re working reduced hours due to the slowdown in the hotel business. (Oddly, the offer won’t apply in Massachusetts, where state law mandates that employees pass a threshold of weekly hours worked in order to receive health benefits. Stupid, but true.)
Of course, one caveat to Marriott’s announcement is that it only applies to direct employees of Marriott International. Thus, employees at franchised properties aren’t necessarily covered by the policy, unless their owners decide to do so.
Therein lies a challenge: Any owner of a Marriott property should, in the spirit of the founder and the current corporate leadership, should do likewise and make sure their employees aren’t subjected to the angst of no health care coverage. Lord knows that while times may be difficult now, you all made tons of money by virtue of your connection to the Marriott system. Now is the time to give back.

I had just finished writing the famed hotel in Waikiki Beach might never reopen when I saw a story saying the owners announced the hotel would reopen with a new management team. New York-based iStar Financial paid $51 million for the hotel in a foreclosure auction before shutting it down last week. This story suggested reopening as a hotel was unlikely. For Hawaii Five-0 fans and the workers recently laid off, thankfully it appears to be wrong.

Couple of interesting and odd stories making the news of late…
• Saw this one in my local sports section: Baseball players are scared to stay at the posh Pfister Hotel in Milwaukee because it’s haunted.
• And even stranger: A polish woman claims her 13-year-old daughter was impregnated by stray sperm in an Egyptian Hotel pool. (I did not find that one in the sports section)

The seemingly unstoppable march toward a green hotel industry has hit a bump in Florida. The state’s new budget, which took effect July 1, includes a slashing of the budget for its Green Lodging Program. Sadly and ironically, the Florida program had been hailed as the most sophisticated and effective of any state green lodging initiatives.
According to press reports, the program’s budget was cut from $337,000 annually to $63,000, resulting in the elimination of three of four people operating the department. More importantly, the department’s revised guidelines now call for spot checks of hotels applying for green status, instead of full inspections, as was the procedure since the program launched in 2004.
It’s another unfortunate sign of the devastation wrought by the current economic environment. It’s a shame that such a promising approach to environmentally conscious hotelkeeping became a victim.

It’s one of the hotel industry’s dirty little secrets (the other, of course, is the profits made from on-demand porn) that tragedies are good for business. Every hurricane season, for example, inland hotels throughout the Southeast fill up with Florida and Gulf Coast residents fleeing from storms. Properties in Texas, Louisiana and Arkansas were filled for months following Hurricane Katrina in 2005.
Now, unfortunately, the death of Michael Jackson is coming to the rescue of the ailing lodging industry, at least in Santa Barbara County, CA. According to tabloid website TMZ, hotels around Los Olivos sold out in minutes following the news that Jackson’s body might be taken to his Neverland Ranch for a public viewing or memorial service. The Fess Parker Wine Country Inn said it sold out the house for the coming weekend within 20 minutes.
Hoteliers shouldn’t feel ashamed or queasy when they capitalize on others’ misfortune. In reality, the industry is providing a service to people who need it, often in desperate times. On the flip side, hotel operators must also resist the urge in these situations to gouge these guests. That would be something to be ashamed of.