Archive for the ‘General’ Category

A 2012 Resolution For Hoteliers

If you haven’t decided on a New Year’s resolution yet, here’s one to consider. By all accounts, 2012 will be a good and perhaps great year for the hotel industry. You’ve heard it before: Business travelers are back, leisure guests never left, no new hotels are being built and the economy is limping slowly back to recovery. That should produce a year in which occupancies rise, rates continue to climb back and hotel owners realize a few more bucks of profit. Halleluiah!

This kind of positive turn of events can lead to a little greed and overreach by owners and operators. While it’s been a tough four-plus years since the economy fell apart, and many bottom lines shrunk nearly to non-existence, it’s not the time to treat your guests with anything but respect. That should be your resolution for the new year: no gouging, price manipulation, strong-arm tactics or any other practices that do anything but make your customers feel good about your hotel(s) and the lodging industry in general.

As you may have heard, starting on January 26, a new federal rule requires airlines to quote the full price of airline tickets in their advertising. That means, the advertised prices must include all non-optional fees and taxes, including fuel charges and the 9/11 security fee. Not surprisingly, most airlines are opposing the new rule as “arbitrary and capricious,” but it’s probably a losing battle and one the airline industry (one of the least-trusted businesses in the country) shouldn’t wage.

The lesson for the lodging industry is that hotels need to stop rate creep through the obnoxious trend toward so-called “resort” or “energy” fees. While hoteliers say the practice helps them compete more easily in tough markets, the actual effect of these often-hidden fees is to turn off existing customers and anyone else thinking of traveling more in the coming year. According to news reports, one resort in Florida even told a guest that its resort fee is required by state law, which it’s not.

2012 promises to be a good year for most of you, but that’s not a slam dunk. Macroeconomic factors outside of your control could easily sour the U.S. economy and jeopardize lodging’s solid recovery. It’s time to resolve to respect your guests in all dealings with them. Don’t become a hated industry, like the airlines.

2011 Proves Hotel Industry is Resilient

Last year at this time, I wrote 2010 was better than 2009 (duh!) and hopefully we could say the same again this year. I think it’s safe to say we can. Although maybe 2011 wasn’t as prosperous as we’d hoped, it’s hard to complain about another year of improvement (check out the year’s top 10 stories here).

Especially if you consider all the challenges the industry has faced, from unemployment and a crisis in consumer confidence, to the ongoing political gridlock that is Washington DC to our own debt-ceiling fiasco here and then the European sovereign debt crisis plaguing the world economy.

I guess the moral of all those story lines is the lodging industry has remained strong, and is perhaps stronger than many thought. Maybe the industry isn’t as tied to the economy and GDP growth as we thought and/or maybe Americans really do believe traveling is a birthright that trumps almost everything else. Who knows, but the fact the economy has continued to teeter while the industry continues to improve is what I’ll take away from 2011.

Sure, there are still many concerns over what might happen if there’s another unforeseen blow to the world economy and about the lack of credit combined with either a trickle or tidal wave of CMBS defaults that loom depending on whom you ask. Those are all pretty large elephants still in the room, but they’ve been there for more than a year now and the industry hasn’t been trampled yet.

My hope for 2012 is we can stop discussing where we’re at in the recovery or recession and whether we’re rebounding (? or !). Let’s retire those terms until we’re at the end of this cycle, which is finally here, and let’s enjoy the climb back up and a return to normalcy.

Hotel Guest Satisfaction Scores Are Disappointing

I got a press release last month from NewYorkHotels.org, an online booking service, trumpeting the fact that 73% of visitors to New York City said in a survey they were happy with their hotel stays. That’s an alarming statistic and should be a major call to action for every lodging property in New York and everywhere. Is that the best the hotel industry can do?

According to the survey, 13% of those surveyed gave their hotels a negative rating, and the remaining 14% of the group were neutral about their stays, which to me is as damning as the percentage of people who had a bad experience. If this is the standard the hotel industry collectively believes is acceptable, then every owner and operator needs to reevaluate his or her operation. No business can afford to have one out of four customers unhappy with the product or service they receive. When compared to other sectors of the hospitality industry, hotels should shine in the eyes of consumers: Everyone hates the airlines and the air travel experience; car rental is a commodity buy that provides no sizzle to the customer; timeshare will struggle until the economy gets healthy; and too many people can’t afford or are afraid of the cruise ship experience.

However, hotels should be a place of refuge, romance, fun, comfort, efficiency and exhilaration depending on why a guest is checking in. And, in fact, even a business traveler can be exhilarated by his or her stay at a hotel, and leisure guests, while primarily seeking romance and fun, also want their stays to be efficient and hassle free. Anything less should be unacceptable to anyone who owns, operates or works in a hotel.

This seemingly low standard of acceptable satisfaction reminds me of a story about J. Willard Marriott, Sr., the founder of Marriott who initially resisted his son Bill’s desire to get into the hotel business. Once the company built and opened the Key Bridge Marriott in suburban Washington, DC in the late 1950s, Bill and the group of hotel pros he hired to help start the lodging business went to JW Sr.’s office with the good news that the Key Bridge property hit 90% occupancy. Instead of the expected response (such as atta boy!), Marriott Sr. wanted to know why the hotel hot shots couldn’t fill up the remaining 10% of the rooms.

The same is true of guest satisfaction. No hotelier should be happy or stop trying to improve until 100% of guests say they’re happy, thrilled, overwhelmed, bowled-over and utterly satisfied with their stays. It’s a job that never ends.

Save the Date: 2012 MLIS

At the very first MLIS in July of 2008, keynote speaker Laurence Geller told a crowd of approximately 500 owners and operators to “stop whining.” Four years later, at the fifth installment of the global lodging investors summit, the head of Strategic Hotels & Resorts will kick off the event on July 16 with a look back at what’s transpired since the first MLIS.

His take will probably make you laugh, maybe even cry and possibly both — just like the last four years in the lodging industry. The event will return to the Hyatt Regency McCormick Place in Chicago from July 16-18. Registration will open next month, so please save the date.

Bruce White of White Lodging will be honored with the 2012 MLIS and Lodging Hospitality Game Changer Award. General and breakout session topics will include the state of the industry (recovery, rebound or recession?), where and how to find financing, the market for acquisitions and development, using social media to drive revenue, repositioning and recapitalization strategies and more.

We’re putting the finishing touches on the program and agenda, so please send me an email with any ideas, topics or speakers you’d like to see. We’ve got some exciting new features and plans slated for the event, but we’re always looking for more. Click here for a look back at all the highlights and coverage from MLIS 2011. Hope to see you in Chicago next year!

Lessons Bill Marriott Taught the Hotel Industry

Back in the 1990s, I wrote a commentary titled “Taste the Soup,” which in many ways captured the genius of Bill Marriott. The nearly 80-year-old CEO of Marriott International retires in March, although he’ll continue to keep his strong hand in the business as executive chairman. He may be giving up the day-to-day reins to the company his father and mother built, but no one believes he’s leaving the business to sit in a rocker on the porch.

While Mr. Marriott was never known as the most cutting-edge hotelier, he’s best remembered as one who could perfect ideas other visionaries brought to the scene. American Airlines may have been the first travel company with a frequency program, but Marriott Rewards has become the gold standard in the lodging business, if not all hospitality, for the ferocious loyalty of its members. Literally, hundreds of thousands of road warriors start their travel planning with what Marriott property they’re staying at. Other examples abound: Jack DeBoer invented Residence Inn, but Marriott elevated it to tops in its segment; same with Ritz-Carlton. Even timeshare, once a sketchy industry populated by shady companies and characters, became respectable once Marriott entered and perfected the business.

But back to the soup and Mr. Marriott’s lessons to the industry. Whereas some hotel company CEOs prefer to keep company with bankers and other captains of industry, Bill Marriott is happiest when he’s touring hotels, a ritual he performs more than 200 times a year. While news of Mr. Marriott’s arrival in a city sends shivers up the spine of many GMs, it also gives them reassurance that the man whose name is on the door actually cares about the hotels, their guests and, more importantly, the associates who make these properties in demand by travelers and profitable for their owners.

When Mr. Marriott arrives for one of his famous inspection trips, he doesn’t sequester himself in the GM’s office looking at the books or the latest Star Reports or the booking pace for next month. He visits guestrooms, meeting areas, f&b outlets, employee break rooms and even the kitchen, where perhaps apocryphally, he tastes the soup of the day. It’s been this hands-on approach to the business from the man at the top that ultimately makes Marriott International the most-successful, most-copied and most-popular family of hotel brands in the world.

In the coming years, Mr. Marriott may cut back to 100 or 150 property visits a year, but I don’t expect him to ever stop doing what he does best: tasting the soup.

Hiring Right the Key to Good Hospitality

It’s a simple concept, but one Horst Schulze has made a career out of: Hire the right people. There’s probably no more basic a tenet in business, especially the hospitality industry, but it’s far easier said than done.

Schulze helped make Ritz-Carlton the brand known for its service, and now he’s trying to take that to the next level with his Capella Hotel Group and its “six-star” Capella brand. The secret, he says?

“My role is exactly this: To have the right employees, properly trained and a part of the organization, not just working for it … To make sure they want to do the job, not have to do the job.”

He’s proven it can work at Ritz-Carlton and he’s making it work at Capella now, but he also inspired approximately 500 Red Roof employees and franchisees at their brand conference in September at the Buena Vista Palace Hotel & Spa in Orlando. Schulze was the keynote speaker there and captivated the audience with a similar message.

He stressed the importance of pleasing the customer, no matter the segment of the industry, and the surest way to do that was by providing guests a clean product and employees who treat them nicely.

It’s a simple, and yes obvious, but true message. Finding and preparing good employees who can do that are the secret from the economy segment all the way up to the “six-star” luxury segment.

Read more about Schulze’s company and its new capital partner and expansion plans.

What Will the New Year Bring for the Hotel Industry?

This time next month, many of the lodging industry’s top guns—brand company executives, developers, management company CEOs, equity fund managers, consultants, media and assorted hangers on—will be packing their sunglasses to head to Los Angeles for the Americas Lodging Investment Summit, the first major hotel business get-together of the new year.

Of course, the main question on everyone’s lips—other than who’s got money to lend—will be what kind of year 2012 will be for the hotel industry. Any such discussion has two prongs: the outlook for hotel performance and the climate for investment. Prevailing wisdom seems to be the industry will continue to build on 18 months and counting of positive growth in occupancy, rates and RevPAR. And while demand growth has been outpacing rate increases that equation could begin to equalize next year.

A much larger question is what’s ahead on the real estate side of the lodging industry. We’ve been saying it at the beginning of each of the past three years, but it seems 2012 will really be the year a lot of hotel owners must face some hard decisions. Many CMBS loans generated in 2007 mature next year, and not every owner will be able to meet their obligations or find money to refinance their assets. The result may be a slew of short sales, defaults, foreclosures, auctions, etc. It could get ugly.

These and other weighty issues (and a few flighty ones, too) will occupy the 2,000 or so delegates for three days of panel discussions, speeches, receptions and, most importantly for many, dealmaking meetings. ALIS returns to Los Angeles after three years in San Diego. New site of the event will be LA Live, the impressive mixed-use complex in downtown Los Angeles that encompasses lodging, meeting space, restaurants, residential and retail. Conference poobah Jim Burba said in an e-mail last week advanced registrations are up 12%, and attendance should match 2007, which was the second-largest ALIS ever.

Burba also said the conference organizers have successfully solved what he calls the lounge-crasher challenge; that is, the significant number of people who don’t buy a registration but hang around the hotel all day (typically in the cocktail lounge) meeting people and doing business. One perhaps-apocryphal story is that some wheeler-dealers have hired seat fillers to hold their tables in the bar until needed for meetings. A clever, if unseemly strategy.

This year, since ALIS will take up all the public space in the host JW Marriott hotel and adjacent Nokia Theater, the hotel agreed to limit access to the property to those with an ALIS name badge and photo ID. The advantage for paid attendees, says Burba, is more seating and places to do business. It will be interesting to see if the cheats find a way around this security net.

2012: The Year for Brand Acquisitions?

The major hotel companies are talking more seriously about brand expansion. That can mean one of two things: These people are crazy, or things are finally and legitimately starting to look up.

Earlier this week at the Golden Nugget in Las Vegas, Vantage Hospitality CEO and founder Roger Bloss talked openly about his company’s “appetite for new brands.”

“We have focused on multiple brands,” Bloss said during a press conference at his company’s annual conference and convention. “We have a huge appetite to find an extended stay brand.”

Bloss wasn’t alone on the hotel conference circuit this year. This fall, and also in the economy segment, Red Roof Inns CEO Andy Alexander said his recapitalized company was potentially looking to expand through potential portfolio or small brand acquisitions.

And Steve Joyce, Choice Hotels CEO, has long coveted a full-service brand, reiterating that again this year at his company’s convention in Boston. With the unique mix of strong industry fundamentals and looming financial distress expected in 2012, this could be the year we see the return of some major portfolio and even brand acquisitions.

Plus we’ll see at least one brand launch from one of the major companies if InterContinental Hotels Group follows through with its plan for a new select-service brand positioned under Holiday Inn Express. At their annual event in October, IHG execs didn’t reveal any new details about the launch, but they made it sound as if it was definitely coming sooner than later.

Certainly the marketers and leaders of these companies know what the trade press likes to hear and write about, but this seems more than just talk. Here’s hoping 2012 offers some big and brazen news and the distressing and depressing stories of the last couple years is really past.

Are You Ready For the New ADA Rules?

You may believe it’s an infringement on your rights as a property owner. It’s confusing, time consuming and probably expensive. But no matter, come next spring new Americans with Disabilities regulations take effect, and you and your hotels had better be ready. And while complying with the new regs may cost you money, it could be insignificant compared to what will happen if you ignore the new rules.

The legal team at Los Angeles-based JMBM has been sounding the alarm about the new regulations for most of the year. Their hotel law blog is a good ongoing resource on this and other lodging legal issues. A recent blog posting provides an understandable overview of what you need to consider before the March 15 deadline. The Department of Justice also has detailed information on what’s expected. However, if you have any questions about the new edicts, reading a blog post isn’t enough. You should consult a legal expert or a consultant specializing in the complexities of ADA compliance. Your brand headquarters, state hotel association, the AH&LA or AAHOA are other possible sources of information.

A couple of key points to remember:

• No hotel or other facility will be “grandfathered” under the rules. Meaning even if your property was built before the original passage of the ADA (1990), you must still comply with the new rules.

• A hotel’s recreation areas—fitness centers, golf courses, pools, steam and sauna rooms, etc.—are particular targets of the new regs, but the law also covers communications¬—res systems, websites and phone service—as well as policies toward guest use of service animals and more.

• The regulations cover all types of public accommodations, including hotels, motels, resorts, condo hotels, timeshare facilities and restaurants.

As I mentioned earlier, there is no hiding from this reality. Compliance must be made in a little more than three months. As the lawyers from JMBM wrote last month in their blog: “If you’re not well into your compliance program now, you may have some serious compliance challenges soon.”

Don’t hesitate. Take action now, if you already haven’t done so.

$44 Million Judgment Against Starwood Beyond Expectation

I’m not a legal scholar, but I was surprised to see the $44-million judgment against Sheraton Operating Corp., a subsidiary of Starwood Hotel & Resorts Worldwide. In the decision, which can be read here, the New York state Supreme Court judge sided with Castillo Grand LLC, the developer of the St. Regis Ft. Lauderdale and still owner of the rebranded Ritz-Carlton Ft. Lauderdale.

The very brief version of the story, which can be read in full here or here, is Castillo Grand and Starwood bickered through the development and opening of the St. Regis. Four different design teams were involved through the six-year process, and the lack of “a final approved interior design” was the root of the delays and problem, claimed Castillo, according to the judge’s decision. Starwood and Sheraton, on the other hand, claimed Castillo’s “lack of project management” was the main problem. Eighteen months after opening, Starwood quit as manager in May 2008 and Castillo eventually signed a longer-term deal with Ritz-Carlton.

The judge ultimately ruled in favor of Castillo and awarded damages based on the forced switch and the development delays. It’s surprising, to me at least, because far more often you see the developer or owner trying to quit the brand, not the other way around. The brands and managers usually have the airtight contracts making something like this less likely.

It’s understandable that a clearly defined design plan is far more challenging to outline and document with luxury brands like St. Regis and Ritz-Carlton. They’re far less standardized than chains like Courtyard or Hampton or even Marriott and Westin. Brands like St. Regis and Ritz-Carlton are known for their service, and St. Regis describes its overall brand standard as “Beyond Expectation.” The look of the hotel should also meet that description, but since every property is different, it’s much harder to define.

Lessons learned from this? From the manager and brand perspective, it’s to make sure those contracts are even more airtight and design quality is more clearly defined. For developers, this is another example of why it’s so important to make sure you pick the right dance partner.

It’s also interesting to note that we’re starting to see more of these legal battles between owner and operator — think back to the Four Seasons Aviara two years ago, and the Waikiki Edition this year, to name two of the highest profile.