Lodging Hospitality

That annual rite of spring—the launch of daylight savings time—comes this Sunday for most areas of the country. (Those not participating include Arizona, Hawaii, Puerto Rico and U.S. Virgin Islands.) While all of you will probably remember to reset your clocks at home and in your cars, it’s important not to forget to do so in your hotels.

A few years ago, someone on our staff was in a Florida hotel on spring vacation. The hotel failed to change the clocks (or, more easily, remind guests to do so) so she and her family missed their flight back home on Sunday morning. Technically, the hotel didn’t do anything wrong since it’s everyone’s personal responsibility to remember these things. However, people on vacation tend to lose track of everyday concerns so it’s easy to understand how they can forget the switch to daily savings time.

Here is the easy solution to this situation: Print a reminder about the switch and have your housekeepers put it on every guestroom bed this Saturday.

Happy spring.

The politicians in Washington may be ineffective and sometimes loony, but they’re no match for their counterparts roaming the 50 state capitals. Here are two particularly harebrained schemes dreamed up by sad and desperate state legislators that seem to have no rationale, except as ways to torment the hotel industry:

• In budget-strapped Tennessee, officials hope to raise an additional $10 million by taxing the value of the food hotels serve to guests as part of complimentary free breakfasts. The proposal in the general assembly is to collect taxes on the food at prevailing sales tax rates by county. A maximum of 9-3/4 percent could be levied. Naturally, the Tennessee Hospitality Association is fighting the proposal, as well it should.

Since the cost of free breakfasts at hotels are built-in to room rates, guests already pay taxes on the meals. My guess is this idea won’t gain much traction, but it’s an example of what lengths states, cities and even the federal government may go to shore up their budgets. We all need to stay vigilant to these kinds of tactics.

• An even wackier idea (although not one related to taxes) is floating around the Minnesota state legislature. That proposed legislation would prohibit spending state funds at any hotels in the state that offer violent pornography on their pay-per-view TV systems. The idea raises a number of interesting questions: Who determines which porno movies are violent and which are not? Is it okay for state employees to stay at hotels with violent porno while they’re out of state?

I’m nearly certain this bill won’t get passed either. It’s a touchy subject for hotels, however, so I’m sure the state’s lodging industry lobby will tread lightly on this and hope it dies a natural death.

I earlier this morning had the chance to talk to Kurt Ritter, Rezidor CEO, and specifically ask about the potential of Hotel Missoni coming to the U.S., and maybe with the help of Carlson. He said Rezidor would love to have a Hotel Missoni in the U.S., like New York City, but there were not currently plans in the works with Carlson to make that happen. “No,” he answered when asked if that might have been the brand Joly was referencing yesterday. “I mean when I say no, that doesn’t mean they would not look at it. We have talked about it some, but have not formalized it. With such a new brand, I think it would be much better if we grow and have five or 10 and then look into it.”

So whether that was the lifestyle brand Joly mentioned having a file on, who knows. But it does sound like it could be a natural fit, although it may be more higher end then the upscale lifestyle segment Carlson would like to fill. Missoni will add its second location this year in Kuwait in late summer and has projects underway in Oman, Brazil and South Africa.

During a media briefing with Hubert Joly at Carlson’s Global Business Conference in Orlando today, Joly was asked whether Carlson had plans to either develop or acquire a lifestyle or economy brand to fill in the only segment blanks left with its other five brands (Regent, Radisson, Park Plaza, Park Inn and Country Inn & Suites, from top down). “We have a file with an upscale brand that’s ready to go, but we’ve decided after some debate not to launch this year and to focus on getting our core brands right,” he said. “And in this market, to launch a new-build brand would be hard. We’re almost ready to go and we will have more innovation.”

I assume by upscale he was referring to a potential lifestyle offering in answer to the question. I also wonder if it might be possible to pluck more than just top executives from European partner Rezidor, which recently launched its own lifestyle brand, Hotel Missoni, which debuted last year in the U.K. It’s a partnership with the Italian fashion house of the same name. I have no idea if it would be possible for the collaboration to extend to a third partner in North America, but it’s an interesting thought.

It’s once again time for Lodging Hospitality’s annual Design Awards contest. Actually it probably was about a month ago, but once again time has flown and I’m remiss in starting this process so late. The Design Awards will run in the April 15 print issue and we need your help in identifying the year’s best hotel and resort design. The deadline for nominations is Monday, March 22. Design firms, property owners and operators or their public relations representatives may submit nominations.

The contest is open to any hotel or resort in the U.S. (and Canada) that completed construction or renovations during the 2009 calendar year. We’ll consider all projects, big and small, as long they are an example of innovative, impressive and/or efficient design.

Nominations must include basic design and property details: name and location of the property and ownership group; date of completion, cost and scope of project; architect and design firms involved; description of the property (amount of rooms, other major features and highlights); a summary of the design style and some examples of what makes it stand above the rest. Nominations also must include four to eight images of the property. Low resolution images are acceptable, but award winners will ultimately need to provide high resolution versions for print publication. If press releases include all the above information, they are acceptable as a nomination.

Please email nominations to LH Managing Editor Eric Stoessel at eric.stoessel@penton.com or mail them to my attention at The Penton Media Bldg, 1300 E. 9th St., Cleveland, OH 44114 by Monday, March 22.

And to clarify, there is no entry fee, or form. Just send me the basic info on the property and project and some images. I’ll follow up if I need anything more.

The news this past weekend that former Secretary of State Alexander Haig died reminded me of one of the funniest—in retrospect, anyway—incidents I’ve experienced at a hotel chain convention. Sometime in the mid-1980s, Best Western had its annual convention in Washington, DC and invited Haig to be its keynote speaker. (I’m sure the late Skip Boyer, Best Western’s in-house historian, would have remembered the year and location specifics better than I have.)

In front of a packed house of Best Western members, journalists, vendors and others, Haig delivered a lengthy speech in which throughout he referred to Best Western as “Great Western,” as in, “I’m so glad to be here today speaking before the Great Western conference.” Not just once did he make this gaffe but it was throughout the speech. As I say, it made me chuckle, but it rightly infuriated and embarrassed the Best Western officers and staff. I’m sure the company paid Haig a hefty fee for the speech, for which the least he could do was get the name of his benefactor correct. After this fiasco, I heard rumblings that Best Western tried to get its money back, or stop payment on the check, but I never heard the outcome.

I’d like to hear from any Best Westerners or others who may remember this simultaneously funny and sad incident.

The numbers weren’t great by any means, but the recent fourth-quarter financial results from the major publicly-held hotel companies weren’t as bad as they could have been, and quite frankly, as bad as they had been the previous year. Most used the words ‘earnings’ and ‘profits,’ which were quite an improvement over last year’s ‘losses.’ It’s more positive news coming on the heels of the moderately and surprisingly upbeat mood at the Americas Lodging Investment Summit last month.

Starwood opened the earnings calls on Feb. 4 with a fourth-quarter loss ($107 million, largely due to charges in the vacation ownership business), but RevPAR fell only 7.9 percent, the best number in two years. Amid the strengthening demand, Starwood changed its outlook for 2010 to flat to positive five percent growth in RevPAR from flat to down five percent.

Marriott turned a fourth-quarter profit ($106 million) and RevPAR was down 12.2 percent, but improved occupancy numbers led to an improved 2010 RevPAR projection, now up two percent to down two percent, from the earlier projection of flat to down five percent. Wyndham also swung to a profit ($73 million), RevPAR declined 11.9 percent and the company said it could turn positive by midyear.

Choice Hotels posted an increased profit ($23.6 million vs. $18.7 million a year ago), but RevPAR fell 14.4 percent and the company was less optimistic than its higher-end counterparts, calling for a two to four percent drop in RevPAR this year. Recovery so far has been at the higher end, as Starwood and Marriott’s results indicate, but the luxury and upscale segments clearly fell the furthest and have the most ground to gain.

Who knows what all these numbers mean, but less bad and maybe kind of good is certainly better than horrible and dire, which is what we heard all of last year. Demand is clearly starting to grow, and although we know rate won’t be nearly as quick to follow, at least there’s some level of hope it will sooner than later.

It’s not ready to announce a new brand—if it ever will—but a Marriott official today said the mega-hotel company has been studying the all-inclusive resort segment “for two years.” Speaking at the inaugural Caribbean Hotel & Resort Investment Summit in Miami, Ed Fuller said he thinks “there is a role for us in all-inclusives.” Fuller heads all of Marriott’s international operations.

By contrast, Jim Abrahamson, chief of IHG’s Americas division, said his company isn’t considering an all-inclusive brand, even though several of its properties in Latin America operate in the segment. “For us, we need to operate all-inclusives as a defensive measure in some markets, such as Cabo San Lucas (Mexico) and Cancun (Mexico),” he told the crowd of 200-plus delegates.

Abrahamson and Fuller were on a lunch-time leaders panel at the conference that originally was slated for four participants. The other two executives—Steve Joyce and Thorsten Kirschke of Carlson—were snowed in and couldn’t make it to the conference, which wraps up tomorrow.

Fuller said Marriott currently has 19 properties in the Caribbean, but that roster could double or triple within five years. Most of the growth, he said, will come in three-star properties, such as its Courtyard brand. Likewise, Abrahamson predicted IHG will double its Caribbean presence in five years, mostly through conversions. The company currently has 10 properties in the region.

IHG today announced its “Luckiest Loser” competition, which takes direct aim at competitor Hilton. IHG is offering jilted Hilton HHonors members a chance to win big Priority Club Rewards points. Hilton recently adjusted its loyalty point values, in essence devaluing members’ points by about 20 percent. IHG is offering its Priority Club Rewards members a chance to earn back lost Hilton points. The ‘Luckiest Loser,’ the PCR member who has the highest verified HHonors points balance, will earn two million Priority Club points, enough to redeem about 80 free hotel nights. Another 20,000 ‘Lucky Losers’ will be awarded up to 400 million total Priority Club points.

“If you want your loyal customers to stick with you during tough times, it’s vital to show you appreciate them and give them more value, not less. So it’s no wonder there was such a negative reaction to Hilton devaluing their points program,” said Tom Seddon, chief marketing officer, IHG.

First the Starwood lawsuit and now this? It’s a smart and aggressive marketing move by IHG, which will surely gain some new members and maybe steal some of a competitor’s most loyal customers.

What’s next, Days Inn hiring Paris Hilton as a spokesperson?

As the lodging industry moves sluggishly toward recovery, the common wisdom was we would now be knee-deep in hotel transactions of all sorts—individual properties, portfolios of hotels and even a chain or management company or two. With plenty of hotel real estate in distress and a pile of equity money burning holes in a lot of pockets, I and many others thought dealmakers would be hard at work by now linking buyers and sellers.

It just hasn’t happened, and no one I talked to at last week’s ALIS Conference in San Diego had a definitive answer as to why. Here are a few possibilities:

• Hotel owners have yet to come to terms with the naked facts that their properties are no longer worth what they think is fair value. In fact, in many cases, these hotels aren’t worth what the owners still owe on them. On the other side of the coin, a lot of erstwhile buyers think they can pick up product on the cheap, like 20 cents on the dollar. When the two sides meet somewhere in the middle, deals will begin to flow.

• Banks and other lenders have little appetite to own real estate—especially assets as complicated as hotels. And if real values are anywhere close to the 20 cents on the dollar buyers think they are, then the banks don’t want these troubled assets on their books.

• Another variation on this line of thought holds that banks realize values are way down and the hotel industry is beginning to rebound—albeit very slowly. Their rationale may be to wait until hotel fundamentals improve significantly and values rise concurrently, and then sell.

The real answer, of course, is probably a blend of these and other reasons. A few things we know for sure: hotel real estate is distressed, a lot of lenders are holding bad paper and a lot of private money (one estimate says $40 billion) is waiting to make investments. This all points to a scenario of increased dealmaking. Everyone thought it would have happened by now, and no one knows when the current trickle will become a torrent.

It will be interesting to watch once the dam breaks.