It’s been a tough month for Hyatt Hotels. Just as the Pritzker family-owned chain was prepping itself to tap into the public markets, a serious PR nightmare overwhelmed the company and its once-good name. As you all probably read, and was so eloquently summarized in PR guru Rich Robert’s online story, three Hyatts in Boston decided to replace about 100 housekeepers with cheaper employees from an outsourcing firm.
That move, and subsequent crisis communications blunders, have seriously injured the company’s reputation and created a giant opening for the snakes at Unite Here to make unionization inroads throughout the hotel industry. Thanks a heap, Hyatt.
Now it seems as though not every financial analyst is keen on Hyatt’s IPO plans. Will Ashworth, a blogger at Investopedia, a Forbes magazine affiliate, says “you’re just plain nuts” to buy shares in the Hyatt IPO. His rationale is two-fold: cash and consumer sentiment. According to his numbers, several other public hotel companies (Marriott, Starwood and Choice) do a much better job of generating cash from revenues. At Choice, for example, cash from operations represents about one-third of revenues. Hyatt, on the other hand, only generates 12 percent cash from its revenues.
In addition, Ashworth argues that consumers are increasingly shying away from upscale and luxury products, including hotel rooms. And Hyatt’s $116 average rate is 63 percent higher than Choice’s, not a good sign in a cheap-is-chic environment.
Ashworth may just be a lone wingnut, and Hyatt’s IPO could turn out to be a runaway success. Time will tell, but it doesn’t look good today.

Some grim and horrible news surfaced in the past few days related to hotel housekeeping. None of it places the lodging industry in good light.
First, Hyatt Hotels made a sound business decision but a terrible public relations gaffe when it fired about 100 housekeepers at three Boston hotels, replacing them with less-expensive workers from an outsourcing agency. The news of the firings resonated with the media and subsequently the public and politicians. Massachusetts Governor Deval Patrick even says he plans an investigation of the matter, although I’m not sure what he can do about it besides bluster.
And while Hyatt Hotels released a statement justifying its actions (the properties have had precipitous drops in revenues and the cuts were accompanied by staff reductions and salary slashes in other departments and among some managers), it hasn’t been able to stem the tide of outrage. Can you imagine how hotel union officials will use this situation in their organizing efforts? It’s especially embarrassing for Hyatt as it is in the process of going public.
The media has been particularly dogged in following the story with USA Today’s Hotel Check-In blog leading the charge.
The Hyatt dust-up pales, however, with the other hotel housekeeper news of the week: a gruesome stabbing death of a resident at a luxury New York hotel apparently by a housekeeping manager at the property.
All in all, not a good period for the hotel industry, particularly in the back of the house.

An announcement last week from boutique bigwig Andre Balazs may signal a subtle but significant change in that segment of the hotel industry. Balazs says he’s close to a deal to sell the ultra-cool Raleigh Hotel in South Beach so he can beef-up and expand The Standard, his group of lower-priced, boutique properties.
While the era of the high-end boutique may be fading, along with the rest of the luxury hotel market, it doesn’t mean, as Balazs is betting, consumers don’t want style, vibe and comfort in their accommodations. In fact, a whole new sub-segment of the market—lifestyle hotels—has emerged in the past few years as a direct result of this consumer trend. Now nearly every brand company has a flag in the lifestyle hotel sector, and it’s one of the few segments where significant development is still happening.
If you’re a developer, lender or have a management company with an interest in the lifestyle and boutique business, you need to make plans to attend the inaugural Lifestyle/Boutique Hotel Development Conference next month (Oct. 12-14) at the Fontainebleau in Miami Beach. Lodging Hospitality and HVS Hotel Management are sponsoring the event, which promises an all-star lineup of speakers on an array of financial, development, marketing and operational topics related to the segment. A highlight of the conference will be a keynote luncheon address by designer Cheryl Rowley, who has created some of the most distinctive boutique interiors in the business.
Go to the conference website for more information. I hope to see you in Miami Beach.

Quick update from Miami Beach at the HD Boutique show…I’m not sure why, but for some reason it appears the AC was not on, or not working, at the convention center in all areas outside of the exhibition floor. So if you (this idiot) decided to get some fresh air and excercise this morning and chose to walk in the near triple-digit temps, you got a rude awakening if you were expecting a refreshing blast of cold when entering the doors of the convention center. The registration areas and seminar rooms were only slightly less boiling than the outdoor sun. Hey, it worked. I spent a lot of time walking the rows of exhibitors to cool off. Hoping the situation is rectified tomorrow, because there were some really good sessions today and it was definitely more uncomfortable than comfortable. Many an attendee, and panelist, spent the sessions fanning themselves with their programs.
So I’m talking about that instead of the cool products I saw and the enlightening sessions I listened too. I’ll write on those in this forum later or in the magazine. The keynote conversation with Jeffrey Beers was interesting and I’ll try to check out the session tomorrow on the remaking of the Fontainebleau. There seemed to be less exhibitors, but the foot traffic seemed pretty solid. Maybe that had something to do with the refreshing temperatures…Here’s hoping to a better forecast inside the convo center tomorrow.

The ongoing saga of the Extended Stay America bankruptcy is getting more grim, especially if you’re one of the lenders in the ill-fated deal. As we reported, the chain filed for protection in June, claiming $7.1 billion in assets and $7.6 billion in debts. The knuckleheads at The Lightstone Group bought the chain two years ago for $8 billion, most of which was financed.
Yesterday, the Wall Street Journal reported that an appraisal of the 664-property chain put its value at a meager $2.8 billion. If that number holds up, both the first-line and mezzanine lenders will take major haircuts on the disposition of the company.
This deal is the poster child for the insanity that swept through the hotel industry—and all of commercial real estate—in what seems like the long-ago days of the mid-2000s. I hope we never see it again.

The Nines Hotel in Portland, OR recently featured in Lodging Hospitality (Luxury+Green=Nines) officially earned LEED Silver status from the U.S. Green Building Council. The Nines is a member of the Luxury Collection of Starwood Hotels & Resorts and is only the fifth hotel worldwide to rank Silver.

As we approach Labor Day, the symbolic end of summer, many hoteliers are getting anxious about what the usually unpredictable fall travel season will bring. With family vacations over and kids back to school, autumn is often a time for seniors to travel. And typically, business travel—both individuals and meetings and conventions—starts to heat up after Labor Day. Of course, there’s nothing typical about the current travel environment, so the industry is holding its breath to see if the travel patterns of past years hold true in 2009.
There’s some reason for optimism, however, even if it’s really just wishful thinking. While the overall hotel industry is still posting double-digit declines in RevPAR, some segments, markets, brands and individual hotels had better-than-expected summer seasons. Primarily due to the staycation phenomenon, hotels enjoying upticks in business included limited-service properties at roadside locations and in drive-to resort markets. Unfortunately, these positive results were spotty and not universal across the country.
And while we don’t know for sure how active the fall travel season will be, projections from AAA call for a relatively busy Labor Day weekend. The travel organization says even though the holiday falls later this year (Sept. 7) than in 2008 (Sept. 1), it still expects this weekend to be the third busiest Labor Day weekend of the decade. Thanks to a plethora of travel discounts, deals and promotions and gasoline being a dollar-a-gallon cheaper than in 2008, more than 39 million travelers will take a trip of 50 miles or more.