Many of the usual suspects are back on top of this year’s North America Hotel Guest Satisfaction Index Study from J.D. Power and Associates, but what is somewhat surprising is overall guest satisfaction increased in all six segments. It’s a credit to savvy hotel owners and operators who have been forced to cut costs (and staff) to survive the worst downturn in the industry’s history, yet still managed to find a way to keep their customers happy.
The real challenge will be during the ongoing recovery as occupancy returns while rate continues to lag. Will any of the programs or employees slashed be brought back or will properties be stretched even thinner? Scott Steilen, a principal of asset management firm Warnick + Co., noted during the recent Midwest Lodging Investors Summit that operations have been scraped to the bone and can’t become a permanent thing. But if rate and revenue aren’t returning as quickly as guests, what will give?
The six leaders in guest satisfaction, according to the J.D. Power’s study, by segment:
• Luxury: The Ritz-Carlton (Four Seasons ranked first last year)
• Upscale: Omni Hotels (Embassy Suites last year)
• Mid-Scale Full Service: Hilton Garden Inn (for a second consecutive year)
• Mid-Scale Limited Service: Drury Inn & Suites (for a fifth consecutive year)
• Economy/Budget: Microtel Inns & Suites (for a ninth consecutive year)
• Extended Stay: Homewood Suites (Staybridge Suites last year)
Other interesting nuggets from the study:
• The proportion of guests making reservations online increased from 54 percent to 58 percent, a year after a three percent drop. Good for brand companies and owners, the study showed more guests booked using the hotel’s site than independent travel sites.
• The top five “must have” amenities for guests are wireless internet access, free breakfast, bedding and pillow choices, pillow-top mattresses and free parking. Seventy-seven percent of guests said they would rather use WiFi than wired connections.
• Guest awareness of “green” programs increased slightly with 68 percent saying they were aware of a property’s efforts.
The study was based on responses from more than 53,000 guests who stayed at a hotel between May 2009 and June of this year.

Leonard “Buck” Hoyle, former head of the Hospitality Sales & Marketing Association International, died last Saturday at age 71. Among his many accomplishments as HSMAI chief for 13 years starting in 1981 was the launch of the Affordable Meetings trade shows, which has become the association’s big moneymaker.
Here is a remembrance by Betsy Bair, editorial director of Penton Media’s meetings publications and websites. Lodging Hospitality is also a Penton Media publication.

It was difficult to read the true mood of the speakers and attendees at last week’s Midwest Lodging Investors Summit, produced by Lodging Hospitality. While there was a lot of uplifting talk about improvements in the hotel market—occupancies and RevPARs are unquestionably on the rise—in nearly equal measures speakers talked of the considerable challenges ahead—a weak financing environment, little growth in average rates and the looming specter of hundreds of millions of dollars of real estate debt that comes due in the next 24 months.
Here is a review of some random quotes from MLIS speakers that show both sides of the optimism/pessimism spectrum on display in Chicago:
• “New development has nothing to do with supply and demand,” said Jerry Cataldo, president of Hostmark Hospitality. “It’s all about financing and once it comes back, there will be a rush to develop again.”
• “We’ve faced the same issue for decades,” said La Quinta President & CEO Wayne Goldberg in discussion of brand proliferation. “Not many new brands will reach critical mass in the next 10 years.”
• One of the few disagreements during a panel of industry CEOs came over the topic of online travel agencies and their effect on industry room rates. Goldberg of La Quinta believes Internet rate parity results in no effect on ADR, that a consumer gets the same rate whether he or she books on Expedia or a brand website. David Kong, president & CEO of Best Western, disagreed, noting a $100 rate on an OTA may only yield $80 to the property.
• Ravi Patel is executive vice president of Hawkeye Hospitality, one of the few hotel companies still developing (six under construction, nine opened in the past 18 months.) While he hasn’t seen construction prices much lower during this era of limited development, “we’ve been able to receive better quality and value from the construction firms we deal with.”
• “When it comes to controlling expenses, cut where the guests will never see it, but never cut marketing,” said Mark Skinner, partner with The Highland Group. “If you do cut marketing, you’ll never get out of the hole.”
• “In the hotel industry’s new normal, some secondary markets may no longer be viable locations for luxury hotels,” said Jim O’Shaughnessy of Cornerstone Real Estate Advisors, citing the recently deflagged Ritz-Carlton in Dearborn, MI. “These are markets where it will no longer be possible to get luxury rate premiums.”
• Similarly, O’Shaughnessy believes owners of upper upscale properties, especially in high-cost urban areas, need to carefully scrutinize the viability of their food and beverage operations. “In many of these hotels, it may no longer be sustainable to offer food and beverage as an amenity,” he said.
• Steve Van, president & CEO of Prism Hotels, had a particularly sobering outlook for hotel owners facing loan maturities in the next year or two. “Things are improving, but the hotel economy won’t recover enough by 2012 to generate sufficient proceeds to pay the loans that come due in that year.”
• Further exacerbating that situation, Scott Steilen, principal of Warnick + Co., said, “Hotels have scraped operations to the bone, but they can’t be permanent cuts, especially as occupancies improve. Also, at some point, owners will face CapEx and PIP issues that will require further funding.”

Many of the speakers at the opening day of the Midwest Lodging Investors Summit, underway this week in Chicago, chose to look on the bright side of the street. While they admit challenges and uncertainties lie ahead, most presenters believe the hotel industry has weathered the worst of the downturn and better times are ahead. Whether that’s fact-based analysis or mere wishful thinking will only become clear in the months to come.
The real good news is the intelligent approach many owners, operators and brands have taken to the stressful times. As both Roger Bloss of Vantage Hospitality and David Kong of Best Western told a general session audience, a downturn is the time to focus on sales and marketing, not wanton cost cutting.
“During the recession our response was to go out and sell, sell, sell,” said Bloss, while Kong said Best Western dramatically increased its advertising and marketing budgets to grab market share from its competitors. “Mere cost cutting is no pathway to prosperity.”
Some of the owners and operators speaking on panels had more of a nuts-and-bolts approach to fighting back in the face of tough times. Bill Morrissey of Morrissey Hospitality presented a laundry list of initiatives he uses at his properties to build relationships with his guests and, as he emphasizes, generate incremental revenues. His sound philosophy: Do nothing unless it produces revenues. A smart tactic is all times, but especially when times are tough.
And while many MLIS attendees have moaned about frozen capital markets, Ravi Patel of Hawkeye Hospitality says his firm is still building hotels: six are under construction and nine opened in the past 18 months. His firm uses a mix of USDA guarantees, SBA funding and local tourism guarantees, along with local banking relationships, to find the capital to build.
That’s the kind of American hotel ingenuity that will ensure a rebound, probably not soon enough for most hoteliers but nearly a guarantee.