by Ed Watkins March 5th, 2012
It’s never easy for businesspeople to wade through the morass of government regulations they need to digest and apply. The latest wrinkle in impossible-to-decipher bureaucratic red tape comes courtesy of the Department of Justice and its impending new ADA rules regarding pool lifts.
As it stands today, by March 15 all hotel pools and spas must be equipped with permanent lifts to help guests with physical disabilities get in and out of the pools. A separate lift is mandated for each pool, hot tub, wading pool—indoors and out—at every hotel (as well as health clubs, public pools, etc.). Cost of a lift is typically around $5,000 or more, a burden for all lodging properties and especially tough for hotels and resorts with multiple pools and spas.
What’s frustrating is that until recently most hotel owners believed they only needed to have a portable pool lift available for any guest who needed assistance. That was the common understanding from Justice Department rules released two years ago. But in recent months, the final version of the regulations came to light, and now many hoteliers are scrambling to meet the new test. (Anecdotally, I’ve even heard of some operators—especially in the budget end of the lodging spectrum—paying to close their pools and fill-in the ground rather than face the new regs. Effective to be sure, but it might not be the best long-term solution.)
I pity the lobbyists at the American Hotel & Lodging Association. They’ve been working overtime the past several months to, first of all, get clarification of the new rules and, secondly, to argue that the requirement of permanent, affixed lifts is overkill and not necessary. As late as last week, the AH&LA reached out to the Justice Department seeking what it called “restoration of common sense” interpretation of the law. As try as they might, I rate the chances of that happening as somewhere between slim and none.
In the meantime, you should be making plans to comply with the law. And while the government won’t be sending around inspectors to make sure you’re following the new rules, there are packs of unscrupulous lawyers who will be on the lookout for hotels not in compliance. When they find them, they’ll convince disabled persons to file complaints or suits over the issue. This type of drive-by litigation is what gives the legal profession a bad name.
In the meantime, consult your local or state hotel association or the AH&LA or AAHOA to see what resources they may have available to you.
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by Ed Watkins February 27th, 2012
Everyone knows business travelers are tethered to their smartphones. They use them to make calls, send texts and e-mail messages and access news and information. And while part of their search activity includes a lot of travel info, they don’t generally use their iPhones, BlackBerrys or Androids to actually book travel—until now, at least that’s what La Quinta believes. At its annual conference this week in New Orleans, the fast-growing and innovative chain of 828 hotels introduced LQ Instant Hold, an enhancement to its mobile website that should enable travelers to quickly and easily book rooms at La Quinta properties.
IIt may be a significant game changer in the world of hotel distribution. As La Quinta’s Chief Marketing Officer Julie Cary pointed out in a presentation yesterday, while more than half of business travelers use smartphones to access travel information, very few use them to actually book hotel rooms, mostly because it’s so cumbersome (and potentially risky) to enter a 16-digit credit card number on a smartphone screen. The brand’s proprietary LQ Instant Hold enables smartphone-equipped travelers to find a La Quinta property and hold a reservation for up to four hours simply by entering their phone number into the system.
The feature will be available on the mobile version of LQ.com by the end of the week, and apps for the iPhone and Android will launch at the end of March. The brand is also upgrading its website with the addition of Trip Advisor reviews for hotels in the system. Cary says La Quinta is the first chain in the mid-scale hotel space to take this confident (some would say courageous) step.
But La Quinta has been on a roll, adding more than 500 hotels to its system in the past 10 years and planning to open 40 additional hotels this year. It’s kicking butt on the performance side of the business, too. Fueled by an 8% increase in RevPAR, systemwide revenue jumped 10% last year to $1.3 billion. Its LQ.com bookings were up 6% and revenues from all electronic distribution soared 11%.
Backed by the power and deep pockets of its owner, The Blackstone Group, and headed by the passionate leadership of Wayne Goldberg and Raj Trivedi, La Quinta seems poised to become the number-one brand in its midscale competitive set.
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by Ed Watkins February 21st, 2012
Many hotel industry pundits, me included, have discussed the things that could stall or even reverse the industry’s steady march back to prosperity. The list includes the U.S. economy, the world economy, CMBS debt coming due, even terrorism. One thing left off the list that could be a real problem for the entire travel business is an old favorite, gas prices. When you last stopped to fill up your SUV, you probably noticed that prices at the pump have been on a steady climb for weeks. The national average, as of yesterday, was $3.57 per gallon, up 60 cents over a year ago.
But it could get a lot worse: John Hofmeister, the former CEO of Shell’s operations in America and now an energy industry lobbyist, says pump prices could top $5 a gallon sometime this year, eclipsing the all-time national high of $4.11a gallon set in July 2008. Of course, gas prices vary wildly by region. In Los Angeles, prices have already topped $4, but they’re only $3.05 in Wyoming.
It’s the usual bugaboos that are causing the rise in prices. Global demand, especially from Asia, continues to increase. Geopolitics, highlighted by a looming showdown with oil-rich Iran over its nuclear ambitions, is another factor. Another problem is the stagnation in exploration and refinery capacity and the political debate surrounding the issue. And the improving U.S. economy, while a good thing, means more travel but additional strain on energy supplies.
Of course, your question is what does this mean for me and my business? An analysis last year by PKF Hospitality Research and Moody’s concluded the economy, and the travel business, could weather a rise in oil prices to $125 a barrel (the price is about $105 now), but a $150-a-barrel scenario could trigger a mild recession, probably reversing the hotel industry’s strong gains in performance over the past 12 to 14 months.
I doubt if it’s time to panic yet, as I seem to recall forecasts for $5 gasoline back in the middle of the last decade. That never materialized, unfortunately mostly due to the fact we tumbled into a recession instead. Nonetheless, it’s important for hotel owners and operators to begin to devise contingency plans if they see rising gas prices hurting their business.
Rising gas prices could also affect the political discourse in the U.S., especially as we approach the teeth of the presidential election campaign. As commentator Mike Barnicle noted yesterday on MSNBC’s “Morning Joe” program, “Do you think we’ll be sitting here talking about abortion and contraception rights if gas prices go up to $5 a gallon?”
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by Ed Watkins February 13th, 2012
Are you ready to pay your housekeepers $60,000 a year plus full medical benefits and a generous pension at retirement? Probably not, unless you own or operate a hotel in New York City that was part of a recent landmark settlement with the city’s hotel workers’ union. That agreement, covering 30,000 workers, was consummated with a minimum of fuss and bluster and ensures labor peace for the next six years.
While some might think New York hoteliers have gone loco to be so generous to their workers, in actuality the owners are crazy like foxes. This kind of contract, as costly as it may be for hotel owners, makes perfect sense on a number of levels. First, of course, it nearly guarantees the record of 25 years without a citywide hotel strike remains intact and continues nearly to the start of the next decade. That gives the number crunchers some hard data to factor into their cost and profit calculations for years to come. It’s a lot easier to obtain financing to buy or build a hotel when you can accurately forecast your biggest expense item.
Bill Marriott often likes to credit his father for a simple philosophy of success in the hotel business. To paraphrase, Marriott says if you take care of your associates, they’ll take care of your guests. We all know the hotel business is a simple endeavor that’s proven by this axiom. It’s a safe bet this contract makes a lot of housekeepers in New York happy about their job, which should translate into greater efficiency and improved service to all their customers. It works for Bill Marriott and it will work for the hotels in NYC.
By any measure, the terms of the contract are mindboggling. Housekeepers currently make about $46,000 a year and will receive 4% increases in each of the next six years for a top annual salary of just under $60,000. Benefits are extremely generous, too. The employers’ contributions to pensions will rise, and the hotels covered in the agreement will continue to fully fund medical, dental and vision benefits for workers. Wisely, the hotels are able to hold down medical costs by operating four clinics in association with the unions at which workers and their families can access basic medical, dental and eye care.
Finally, and most importantly, the hotel owners in New York need to be congratulated for doing both the smart thing and the right thing. Tourism and the hotel industry are booming in the city—50 million visitors last year and undoubtedly more this year and beyond—so it’s a very profitable business to be in these days. Union members read the papers and listen to the TV news, so they know the hundred of millions of profits at stake. It’s only right they fully participate in the spoils of this success.
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by Ed Watkins February 6th, 2012
They may not yet be ready to exchange gifts on holidays, but it looks as though Choice Hotels and the Asian American Hotel Owners Association have patched up their differences that nearly got the mega-franchisor booted out of the influential 10,000-plus-member hotel owners’ organization. In a letter sent late last month to Choice President & CEO Steve Joyce, AAHOA leadership outlined a list of changes Choice has promised to make that will qualify the company to renew its AAHOA membership.
Most of the items were fairly basic and involve Choice’s impact policy. A few other things on the list, while important, aren’t earthshaking. In one bullet point in the agreement, Choice agreed to commission a study to address the mission and structure of its owners’ council. Part of that discussion will be whether to refocus the council as a completely independent group, similar to the IHG Owners Association.
Last September, the AAHOA board sent a letter to Choice telling the company it needed to change its attitudes and practices toward its franchises or face rejection of its membership renewal for 2012. Those membership privileges include access to the AAHOA annual and regional conventions, events where thousands of current and, more importantly, potential franchisees attend.
The rift between the two groups and its relatively swift (four months to the day) resolution may mean a growing détente between the big franchise companies and their owners. My friend and franchisee advocate Stan Turkel disagreed with me last fall when I commented that the Choice-AAHOA disagreement wouldn’t escalate into full-fledged warfare. I seem to be right this time. AAHOA had a problem with Choice’s conduct, and it made its feelings known in a direct and consequential way. And, by all appearances, the two sides were able to sit down, hammer out their differences and agree on a course of action. For a change, there was no PR campaign in the press or inflammatory remarks made on the stages of various industry conferences to make the situation worse.
I hope I’m right. An adversarial relationship between franchisors and franchisees (and their AAHOA proxies) is a healthy thing. It’s not healthy, however, when either side strays from the key issues and resorts to grandstanding.
I congratulate both Choice and AAHOA for taking the high road to solving their differences this time.
Related Topics: General |
by Ed Watkins February 2nd, 2012
I got a big chuckle this week reading an online think piece in Crain’s New York Business. The story, titled “The Trauma of Tourism” and written by Erik Ipsen, recounts the disgust some New York residents have for tourists fouling their otherwise-perfect lives. In particular, people living in SoHo are ticked because so much retail has gone into the neighborhood that sidewalks and cafes are jammed with these out-of-town interlopers. Likewise, the hipsters in the Williamsburg section of Brooklyn don’t like that some of the city’s 50 million annual tourists make their way across the Brooklyn Bridge to drink in the neighborhood’s bars.
Sorry, but I don’t have much empathy for these people. Coming from a city with precious few tourists (save those who come for a ballgame or to visit the Rock and Roll Hall of Fame) and an economy to match, I find it outrageous that people turn up their noses at the rich economic engine that is tourism. Tourists, especially those who visit New York, arrive with lots of cash they’re willing to spend on tiny $300 hotel rooms, $55 steaks and $18 cocktails.
Then, once their wallets are depleted, they get back on a plane or in a car and leave. They don’t send their children to local schools or usually don’t use the city’s healthcare system. They come, they spend and then they leave. I wish we here in Cleveland were so lucky as these brats in New York. They need to wake-up and appreciate what they have: prosperity fueled by tourism.
Related Topics: General |
by Ed Watkins January 30th, 2012
God bless, the revenue manager. He or she may be the most valuable player in any hotel organization. At any given moment, they’ve got multiple balls in the air and have multiple masters to please. Their job, of course, is to maximize the revenue stream of a particular hotel or set of properties using all of the distribution channels at their disposal. But that’s the problem: Every hotel has a plethora of distribution channels to employ, ranging from brand.com and its own website to transparent and opaque OTAs to the GDS to social media channels and more.
What’s more, the revenue manager must take cues from a range of stakeholders, which can include the owner, GM, director of sales & marketing, even brand and/or management company headquarters. Juggling these options and the sometimes-conflicting priorities of management make for a big headache.
And yet, while revenue managers are certainly the linchpins for the success of most hotels, they’re often overworked, under-experienced, under-paid and under-appreciated. As someone said to me recently, “Does it really make sense to entrust the fate of a multi-million-dollar investment like a hotel in the hands of a $27,000-a-year revenue manager who’s probably a year or two out of hotel school?” Probably not, but that’s the case in many hotels. It’s no wonder a lot of these people fail or burn out within a couple of years.
Instead, the industry—starting with hotel schools and continuing through the brands and management companies and down to the property level—should elevate the status, compensation, requirements and expectations of the revenue management function. The revenue manager should be part of any hotel’s executive committee, perhaps above the director of sales & marketing in influence in the hotel’s decision-making. They certainly should have a seat at the table when short-, medium- and long-term financial and performance goals are set.
In years past, the traditional route to become a GM went through food and beverage or the rooms department. The GM of the future may still use those routes but also must have solid grounding in both the strategies and tactics of successful revenue management. Once that’s the norm, GMs will give their revenue managers the respect, authority and compensation they deserve.
Related Topics: General |
by Ed Watkins January 24th, 2012
Day one of this year’s Americas Lodging Investment Summit underway in Los Angeles produced no surprises: no big announcements, no rhetorical gaffes, very few laughs and only a couple of spontaneous applause lines. It’s the beginning of the year, following a pretty good year for the industry, so the mood among the 2,400 delegates at the JW Marriott at LA Live is one of optimism on what the rest of 2012 will bring.
At yesterday’s opening general session in the spacious (7,000 seats vs. 2,400 attendees at ALIS) Nokia Theater, conference chairman Jim Burba unveiled results of a delegate survey that demonstrated the giddy optimism that probably resonates throughout the industry. More than nine out of 10 of those surveyed believe RevPAR will grow again in 2012 and their individual companies will also show positive growth this year. Perhaps more surprisingly, 53% of the group believes they’ll be more hotel development this year than in 2011. Of course, STR says just 373 new hotels opened last year, so it won’t take much to post an increase in lodging construction.
The data gurus from STR, PKF-Hospitality Research and HVS also fueled the general upbeat outlook. Using the catchphrase “see the green in 2013,” Jan Freitag of STR forecast a year that will beat 2011, a year in which the industry sold a record one billion-plus roomnights. Mark Woodworth of PKF-HR described the future as “headwinds diminish, tailwinds develop.” And Suzanne Mellen of HVS sees hotel transactions increasing this year and spreading to more diverse markets than the top 10, which saw 73% of the action last year.
With all the good vibes floating around the JW Marriott, it’s hard not to jump on board the future is bright train. That attitude, of course, can lead to excess, not this year certainly and probably not soon, but eventually.
The only wave of dissent that seems to fill the conference hallways centers on the conference’s new anti-lounge lizard policy. In order to keep non-payer gatecrashers from cruising the hotel bars and restaurants during the conference, the organizers have barricaded entrance to the hotel beyond the front desk to anyone not wearing a valid badge. The tactic led one pundit (me) from paraphrasing President Ronald Reagan’s famous speech in Berlin as a possible slogan for the dissenters: “Mr. Burba, tear down this wall.”
Related Topics: General |
by Ed Watkins January 17th, 2012
Next week’s Americas Lodging Investment Summit will provide the hotel industry with a good early barometer to the outlook for the business in 2012. And, as it is at most industry conferences, it won’t necessarily be what is said on the podium of various general sessions and breakout discussions that will be important. The real mood of the conference (and the industry) will be divined in the thousands of conversations held in three days in the hallways, hospitality suites, bars, restaurants and coffee shops of the host hotel, the JW Marriott at LA Live.
Everyone going to next week’s ALIS wants to be optimistic, but nearly everyone will approach the meeting with at least a few nagging doubts in their minds: Where is the economy headed? What will be the end game in the European financial crisis and how will that affect the U.S. and our tourism industry? Who will win the presidential election in November, and how will that change the economic outlook? Obviously, ALIS won’t produce any clear-cut answers to these questions and others, but most attendees will walk away from the meeting feeling either good or bad about what’s ahead.
ALIS conference chairman Jim Burba and his crew seem to have an optimistic outlook. Last summer, the ALIS planning committee met in Dallas to design the 2012 program. At that meeting, Burba said the conference theme was “Rebound.” However, he wasn’t sure whether Rebound should be followed by a question mark or an exclamation mark. Apparently, optimism won over, as the official conference collateral material boldly shouts the theme as “Rebound!”. That may be an unscientific indicator, but it shows some in the industry believe 2012 will be even a better year than was 2011, which was pretty good.
Naturally, this year’s ALIS has its share of star-power speakers (Bill Marriott, Sam Zell, Donald Trump), but there are a few less star-studded sessions that should provide a good sense of where the business is headed. A pair of panel discussions on Tuesday—one with private equity fund executives and the other with leaders from hotel REITs—will be a good barometer of who’s buying what in the coming year. And the final session of the conference, the annual scrum among members of IREFAC, will probably produce a lively, often-humorous, but only occasionally definitive outlook for the hotel investment climate.
Given last week’s announcement of Room Key, the six-brand online booking consortium, distribution, revenue management and social media will be another hot topic at ALIS.
This year’s ALIS is on track to have the second-largest number of attendees since 2007, which set the attendance record for the 11-year run of the event. For more information or to register, go to the ALIS website.
Related Topics: General |
by Ed Watkins January 9th, 2012
Here’s some unsolicited advice for any of the candidates running for President this year. When the topic comes around to creating more jobs—and in my mind that should be the signature issue of the entire campaign—a smart candidate will veer the conversation away from foolhardy promises of recreating the nation’s once-vast manufacturing base. Instead, he should utter one word as his antidote for our ailing economy: tourism.
All he needs to do to prove the point is to cite the data from the Department of Commerce, as was trumpeted in a recent Office of Travel & Tourism Industries press release. In the third quarter of 2011, travel and tourism-related employment rose by an annual rate of 1.4%. That followed a 2.4% increase in the second quarter. By contrast, total U.S. non-farm employment rose an anemic 0.9% in the third quarter. No one can argue with the impact of those numbers.
So instead of trying to pretend we can lure long-gone manufacturing jobs back home, the next president should mount a full-court press to support the travel industry in any way his administration can, as long as the result is more foreign visitors coming to the U.S. and more jobs created to serve those people of the world who can’t wait to come to America to see everything from the Grand Canyon to Disney World to Main Street USA. First on the agenda must be repair of the broken visa system. There are literally tens of thousands, maybe hundreds of thousands, of middle-class Chinese, Indians, Brazilians and others willing and able to hop on a plane to the U.S., stay a week to 10 days in our hotels, spend thousands of dollars in restaurants, shops and at attractions. They just need a fast, efficient and secure way to apply for and receive visas.
And while the Travel Promotion Act created an infrastructure that allows the federal government to partner with the private sector to market the U.S. as a tourism destination, the country still needs a cabinet-level secretary to make sure the government is doing all that it can to help tourism-related businesses attract and serve an increasing number of foreign tourists.
Promoting additional visitations to the U.S. comes with another benefit beyond economics. The more people who come to America, visit its sites, see its abundance and, most importantly, get to know its people, the more likely they’ll return home with a favorable impression of America and its people. Travel and face-to-face interaction may be the most potent peacemaking tool.
Related Topics: General |