I’ve read a lot of press accounts lately of hotels in trouble. In fact, the pace of lodging assets going into distress seems to be quickening. One explanation of course is the convergence of a depressed hotel market with poor financing and development choices. In other words, some developers overleveraged themselves and opened properties just as the market was turning ugly.
That’s true in many cases, but nearly as often it’s plain bone-headed development decisions—not just the economy or shaky financing—that has doomed some properties. That light bulb turned on for me this morning as I read a press account of the Se San Diego, a boutique property that filed for bankruptcy this week. Reasons cited by the owner were poor timing of the opening (December 2008) and a “crushing debt load.” Those issues are severe, to be sure, but an observation from consultant Robert Rauch really tells the story. He mused that the property’s real problems are more basic:
“It is a property that has an inferior location and no brand and a huge amount of debt in a terrible market,” he said to sum-up the situation.
Rauch provides a valuable lesson that hotel’s developer either forgot or never learned: An ill-conceived hotel will probably never be successful, even in an up market, and it makes no sense to violate the laws of the hotel jungle. Of course, the kicker in this situation is the developer made another dumb mistake in tacking 23 condos—all unsold—onto the project, as though that would have made it a viable proposition.
As Forrest Gump said, “Stupid is as stupid does.”

As HITEC, the hotel industry’s top technology event, gets underway today, hotel owners, operators and, of course, technology geeks are in Orlando to find the next big thing in hospitality IT systems. Judging by the avalanche of pre-show press releases by many exhibitors, two trends are emerging for this year’s HITEC: cloud computing, or software as a service; and mobile technology, particularly applications for Apple’s iPad.
While SaaS has been a concept floating through hotel technology for many years, it’s startling how many tech suppliers have so quickly created applications for the iPad, a device that’s been on the market for less than five months. The questions will be how innovative the applications will be versus just being gimmicky and cool and how many vendors will have fully operating, ready-to-go-to-market iPad-based systems as opposed to theoretical mock-ups.
A final word regarding the HITEC venue: While nearly everyone I spoke to leading up to this year’s show expressed aversion to HITEC returning to Orlando (the main complaints are the oppressive heat and the vast distances between the hotels, convention center and the restaurants and other venues where many extra-curricular events are held), early word is that attendance is up, as it usually is when the event in held in central Florida. Go figure. Next year, HITEC returns to Austin, TX, also a hot place but much more fun and manageable. Many veteran HITECers long for the conference to revisit Minneapolis, the consensus all-time best venue for the event.

A new study from Ypartnership and Harrison Group confirms what most hoteliers have known since the beginning of the recession: no matter what, American consumers are still going to travel. The trick, of course, is to capture more than your fair share of that business. And, according to the study, that’s done through value, deals and, I hate to say it, lower rates.
The survey of 2,500 households with annual incomes of more than $50,000 showed the group averaged four leisure trips in the past 12 months; 16 percent say they’ll take more trips this year than last; and two-thirds will take the same number as last year.
And since most of those surveyed say the economy is forcing them to moderate their shopping and consumption behavior, they’re all looking for deals and special offers or to trade down in their travel choices. More than a third say they’re more interested in coupons of direct offers this year than last. An equal number look for sales. And it logically follows that these travelers turn to the Internet to plan and shop their travel.
However, in what should be a jolting data point for hotel marketers, 66 percent of the group say they use online travel agencies (Expedia, Travelocity, Orbitz) to book travel, versus 48 percent who use branded sites (Hilton.com, Hertz.com). Just a few (15 percent) turn to meta search sites such as Kayak or Dealbase.
The bottom line is that Americans still consider travel a birthright and they’re not willing to give it up. However, at the same time, no one wants to pay retail anymore, so you’d better be creative in your marketing, i.e., produce value as cleverly as you can, in order to beat your competitors.

Schizophrenia reigns at the New York University International Hospitality Industry Investment Conference underway this week at the Marriott Marquis in New York City. On one hand, a lot of speakers and attendees are proclaiming optimism for the short- and medium-term future of the hotel industry. Even Arne Sorenson, president and COO of the typically conservative Marriott International, said he’s “wildly optimistic” about the industry, predicting “rates will come back (rise) soon and, in fact, are already beginning to do so in some markets and segments.”
Predictably, other CEOs at an opening general session before a throng that surely was larger than last year’s crowd were more circumspect. Andy Cosslett of IHG said the “clouds are lifting, but there is still reason to be quite cautious,” citing the fragile economic climate in Europe as example. And Mark Hoplamazian of Hyatt believes we’re at the “very, very early stages of what feels like a recovery.” His concern, however, is the state of the larger economy, especially jobs and housing prices.
Everyone seemed to agree the luxury and, to a lesser extent, upper upscale segments of the market will lead the way to recovery. Mark Lommano’s updated industry forecast shows luxury occupancy rising 8.2 percent this year. And while rates will only be up slightly, RevPAR should increase by 8.5 percent. RevPAR for the whole industry should be up by 3.0 percent this year, said Lommano.
“The death of luxury lodging is poppycock,” said Sorenson, noting that RevPAR for Ritz-Carlson is growing faster than any other Marriott brand. “Even during an economic decline, luxury hotels have distinct advantages in facilities and abilities to provide guests with unique experiences.”
Another divergence of opinion at the conference concerns the transactions market. A report released yesterday by Jones Lang LaSalle Hotels indicates that improving industry fundamentals are driving more buyers and sellers to market.
“The outlook for hotel investors is on the upswing,” said JLL CEO Art Adler in releasing the report. “There is a clear consensus that values of hotel assets—ranging from select-service properties to luxury hotels—firmed during the past three to six months, laying the foundation for a more congruous understanding of value.”
Yet, talk around the halls, bars and cocktail parties during the conference seems to contradict that notion that transactions volumes are about to increase exponentially. Most attendees still say financing is difficult, or nearly impossible, to find for most any kind of lodging deals.
“Private equity is about the only money available for any kind of transactions,” one president of an ownership group told me. “And the untold story still to come is the amount of distressed properties that have yet to boil to the surface.”

The brewing controversy over extra fees imposed on hotel guests is not going away, nor should it. A startling (perhaps not?) new survey from D.K. Shifflet shows quite convincingly that the worst thing the hotel industry could do is follow the path taken by the airlines and begin to nickel and dime their guests.
In a survey of 500-plus consumers who’ve stayed in lodging properties the past three months, three of the top five annoyances for hotel guests are items that involve added fees: charging for Internet access, hidden fees at checkout and charging for parking. The other two annoyances in the top five were uncomfortable beds and thin walls between rooms.
The hotel industry has a rare opportunity to shift its strategy before it’s too late. Bundling all reasonable fees into the room rate makes the most sense and will be most appreciated by guests. I know room rates and by extension, revenues are a problem for nearly every hotel, but all signs signal a turnaround. Occupancy is improving, and rates are sure to follow. Don’t be stupid enough to trade short-term revenues for long-term disgust by your customers.

At a time when many companies are making travel less convenient and less customer-friendly, IHG announced a wrinkle to its Priority Club program that every member will love. Hotels Anywhere, IHG’s Macy’s and Gimbels-type initiative, allows Priority Club members to redeem their points, or combine points and cash, to book hotel stays at tens of thousands of hotels, even direct competitors.
Working with its tech vendor, ezRez Software, IHG created a website members can use to find, assess quality and book rooms at hotels around the world. Even with 4,400 properties worldwide, IHG confesses it isn’t everywhere (on the Hotels Anywhere website, the company cites Las Vegas, Hawaii and the Greek Isles as examples of destinations where it has little or no presence), but customers can still visit anyplace they want to go.
Marketing purists will say this is business suicide, that a company should never direct its customers to a competitor. But in today’s consumer environment, where the public feels travel companies aren’t giving them the love they deserve, a gesture like this can go a long way to convince travelers that some companies (in this case, IHG) do care about their customers.
A smart move.

When it has the resolve, the lodging industry can get a lot accomplished. A good recent example involves the dust-up surrounding Arizona’s controversial new immigration enforcement law. The knee-jerk reaction by many opposed to the law was a call for a boycott of the state’s meetings and tourism industry. Of course, what was lost in the rhetoric is the fact that it’s hard-working people in the state’s hospitality industry who would be unfairly penalized should such a movement gain strength.
But to its credit, many sectors of the hospitality industry, with lodging at the lead, stepped forward to pressure those advocating a boycott to reconsider their actions. The AH&LA, for example, sent a stern letter to the Washington, DC city council as it was gearing up to join the boycott. While action by the council is still possible, the measure has been tabled for the time being.
Even more interesting is the stand taken by the Asian American Hotel Owners Association. While it also quickly made a public case against a boycott, I’ve got to imagine some AAHOA members are at least a little ambivalent over the whole issue. After all, AAHOA was created in the late 1980s to fight the prejudice and discrimination Asian-Indian entrepreneurs felt as they tried to create their version of the American dream. On one hand, they have a financial stake in Arizona’s tourism business (AAHOA says its members own 40 percent of the state’s 1,100 lodging properties), yet on some level they must feel empathy for immigrants, even illegal ones, as they try to succeed, or at least survive, in their new homeland.
The larger point, however, is the power the U.S. lodging industry can wield if it has a clear-cut objective and marshals its forces in a rational, yet passionate way. I hope this spirit of activism can be tapped again as other key issues threaten the hotel and tourism industries.

I read recently the current owners of La Font Inn in Pascagoula, MS are closing the hotel’s food and beverage operations and will probably soon shutter the entire property. The region’s already-depressed economy never really recovered following Hurricane Katrina, and business is difficult to find for a 50-year-old, unbranded hotel past its prime.
Of course, similar scenarios play out across the country all the time. Ailing economies, changing consumer tastes and plain-old old age often make hotels obsolete. However, this closing is nostalgic for many seasoned hoteliers because La Font Inn was owned for many years by the late Doug Fontaine and his family. Doug, a southern gentleman straight out of Central Casting, had a management style that is rare in today’s corporate, bottom-line-first style of hotelkeeping. He ran the hotel as a de facto civic center; it was the place where politics, commerce, leisure and even some sordid activities all merged in a sleepy Gulf Coast town. It’s even the spot where the career of now-disgraced U.S. Senator Trent Lott started and ended.
I knew Doug back in the 1970s and ‘80s, when he was very active in industry affairs and served as chairman of the AH&LA in 1982. As I said, he was a gentleman and part of a dying breed of hotel owners who view their businesses as more than just a cash cow or real estate appreciation machine.

A recent post to the always-entertaining HotelChatter blog discussed a not-so-new scam thieves are trying (apparently with some success) to foist onto hotel guests. In the scam, the thief calls a hotel, asks for room 520 (or whatever). Once connected, the scammer pretends he or she is from the front desk, saying there is a problem with the guest’s credit card info. The would-be thief asks the guest to read back the card number and the secret 3- or 4-digit code on the back.
I don’t see this scam working in most hotels, because as part of their training, hotel telephone operators (or whoever answers the phone at a property) are told not to put calls through to rooms without asking for the name of the guest. It’s a simple way to avoid this kind of scam or even something worse, such as an attack on a woman guest.
While that may be SOP at most hotels, this would be a good time to reinforce that rule for anyone at your property who could allow a guest to fall victim to such a ruse.
While it may ultimately be the guests’ responsibility to not succumb to such a trick, you as an innkeeper have a moral, if not legal, obligation to prevent this kind of crime.

Red Roof may be having some financial troubles, but many of its guests like the chain for a somewhat-surprising reason: exterior corridors. A new survey commissioned by the chain says many of its customers—bikers, seniors and pet owners, in particular—like the outside entrances found on many of the chain’s properties.
The chain thinks it may be tapping into a counter-trend. Marina MacDonald, SVP of sales & marketing, says since many chains are forcing exterior-corridor properties out of their systems, she believes her brand has an opportunity to create a profitable niche. She’s got a point: While many travelers view exterior corridor properties as out-of-date, unsafe and drafty, others actually prefer the convenience of a drive-up hotel experience.
To accentuate this advantage Red Roof perceives it has, the chain is planning a spruce-up day at its properties followed by a property-versus-property competition to determine the chain’s best-looking exterior.