Blog List
1 Oct, 2009
Let the brand bidding begin

It's no secret that strong companies with longevity often are born during a downturn, when owners and entrepreneurs strike while the iron is hot, acquiring assets at low cost, and at just the right time to build value.

Judging by some conversations I had at last week's Lodging Conference, the hotel industry is inching closer to that sweet spot, where acquisitions will start to make sense.

We have barely begun to see the wave of distressed hotel assets that will come to market, that's for sure. But what's piquing our interest this week here at Hotel & Motel Management is the chatter about distressed hotel brands--what they are, and who might be in a position to pick them up.

In a conversation with the always-talkative Steve Joyce last week, the Choice Hotels CEO said Choice "is interested in expanding." Expanding how, Steve? "We would really like to be in the full-service segment," he said.

With a portfolio that is two-thirds leisure focused, Joyce said the time is right. "Our view is, now is our time," he said. "There's never going to be a better set of circumstances."

And what about this article published yesterday at Bloomberg.com: "Wyndham May Buy Hotel Brands, Competitors' Operations"? Since Eric Danziger came on board, building a management team has been a huge focus for the brand, and now that those people seem to be in place, the time might be right for Wyndham, too.

The question remains then--what brands are ripe for a sale? Gossipping about brands is risky business that we don't like to delve into too often without cold, hard proof. But it's no secret that Hilton is in the middle of some brand issues these days, what with the demise of Denizen before it began (and the resulting legal chaos). The company's renaming and rebranding initiatives hint at the possibility of future brand family changes and seem like a step in the right direction to built more brand clarity. We'll see if Hilton's latest marketing and executive changes translate to a tightening of the portfolio down the road.

And what about Red Roof Inn? The Columbus, Ohio-based chain began defaulting on its mortgage in recent months (read an article on BloggingStocks.com here) to the tune of more than $350 million in mortgage payments.

My knowledge of hotel foreclosure issues grows every day, but what I know is the mere tip of the iceberg. Here's the point in the blog where I'll point you to Steve Van's wonderful Hotel Default Blog. If you are an owner, operator or developer and you haven't bookmarked this site, do it now. While you're at it, here is Jim Butler's take on the new CMBS rules--another hot topic last week in Phoenix. (Oh yeah--if you haven't bookmarked Jim's Hotel Law Blog, you're missing another regular dose of freebie education. Commercial over.)

Wait, one more commercial: Find out more about dealing with distressed hotel assets at the upcoming Distressed Hotel Summit, produced by the HotelWorld Network and taking place Oct. 12-13 in Washington, D.C.


By :Stephanie Ricca



22 Sep, 2009
LaQuinta holding tight

The Lodging Conference in Phoenix is always great for the extended time you can get with quality industry people. I had an enlightening chat this evening with LaQuinta’s Wayne Goldberg, president and CEO, and Raj Trivedi, EVP of franchise and chief development officer, about how their company is handling things and going forward.

First the bad news—August was the company’s worst of the year. But that says more about our industry than the mid-market company itself. In fact, Goldberg told me he feared that his company might take a hit and lose out against the competitive set in August, seeing as how the month was progressing so poorly. But when everyone’s numbers came out, he said LaQuinta still was number one amongst their direct competitors, showing that it was a bad month August for much of the lodging industry.

[An aside—when discounting the effects of the national political campaigns in 2008 and Hurricane Ike in 2007, the numbers for August are still bad, but maybe not as bad as they look.]

Trivedi sees “challenges in the next eight to nine months,” but he’s also optimistic.

“The important thing is taking advantage of this time,” he said, explaining that LaQuinta is working on teaching franchisees how to run their operations better. Trivedi also said that he sees the next 18 months as a great opportunity for acquisitions.

LaQuinta is also moving ahead full force on the international front, aggressively opening properties in Mexico and Panama. And Trivedi said that announcements about several other countries would be coming in the near term.

Goldberg (left) also said he was concerned about the next six months, but he anticipates things to get better after that, particularly in the second half of 2010. And he said that their franchisees are holding up through this difficult stretch.

“I couldn’t ask for any better—they understand we’re going to stand by them,” he said. “This is not a six month relationship we have with them, it’s more like a 20 year marriage.”

 

 


By :Paul J. Heney



6 Aug, 2009
At least we're talking about transactions now

It's official: Hyatt Hotels is planning an initial public offering to take the company public. According to a statement the company released yesterday, the number of shares and the price per share are to be determined. Documents filed with the U.S. Securities and Exchange Commission include letters of employment for CEO Mark Hoplamazian, CFO Harmit Singh and executive chairman of the board Thomas Pritzker, offering them their current job titles within the to-be-formed public Hyatt Hotels Corporation. Business interests held by the Pritzker family today control about 85 percent of Hyatt Hotels.

The goal, the company says, is to raise money—$1.15 billion in the IPO—to invest in properties and businesses.

According to a Reuters article, this would be the third-largest prospective IPO in the U.S. pipeline right now.

Might this bid for funds be a positive indicator that hotel industry activity is stepping up? I think now of the first half of 2007, when company after company went private, trying, among other reasons, to escape some of the Sarbanes-Oxley-fueled scrutiny that came along with being accountable to shareholders. Then the talk swirled about companies like Wyndham, IHG and Starwood following the Hilton path and going private.

Those rumors never have gone away, but in this year's dismal transactions environment, there's barely enough cash to scrape together to buy a single asset, much less a company.

Now--bam! A big private company goes public. Yes, Hyatt will make money with this IPO to reinvest in the industry (and strengthen its own portfolio), but my eye will be on that initial offering and what the analysts have to say.

 

 

 

 


By :Stephanie Ricca



4 Aug, 2009
A unique view of the impressive W South Beach

While in Miami last week, I had the opportunity to check out the lavish, design-oriented W Hotel and Residences in South Beach, Fla. The property opened its doors on July 2, making it the 31st W Hotel to open worldwide (the 32nd, in Washington, D.C., opened this week).

What stood out immediately to me was how open and light the W South Beach is compared to earlier Ws that took on the dark, nightclub feel. Floor-to-ceiling windows continously remind the guest where they are, directly on top of stunning, blazing Florida sand.

Obviously design centered, the oversized artwork by famed rock photographer Danny Clinch grabbed my attention in the hallways and guestrooms. Of the several outside retreats, The Grove (garden) and Wet (pool) were the most inticing places to sit and order a refreshing beverage.

The W South Beach is unique in that each guestroom/condo can be purchased and then entered into the hotel's rental program. Unofficially, at the end of July, about 80 percent of the units had been sold.

Take a look at how Starwood used the South Beach landscape to deliver yet another standout hotel experience:

 


By :Jason Q. Freed



23 Jul, 2009
Undercutting isn't the answer

Anyone ever watch "The Tom Green Show" when it was on MTV in the late 90s? Oh, no? Just me? Well, it was a "Candid Camera"-type of show in which Tom Green would walk around and do things to agitate people. And one of the only segments I remember was called Undercutters Pizza. The premise was Tom followed a pizza delivery guy on his way to deliver a pizza. And before the actual pizza guy got to the house to deliver the pizza, Tom ran out of his car with his own pizza and a tackle box filled with toppings, asked the people what toppings they needed and tried to sell them his pizza at a lower price. In the end, he was literally chased away by an enraged man wielding a hammer. I thought of this while looking at a chart of Q1 numbers in Hospitium's latest Lodging Ledger. The moral of both the chart and Undercutters pizza? Rate cutting doesn't seem to work.

Take a look at the numbers I'm referring to:

                                                   Occupancy                          ADR                                  RevPAR
                                                 '09   '08  % change      '09   '08  % change                '09   '08  % change
Orient-Express                          61% 67% (9.0%)         $432 $470 (8.1%)               $266 $314 (15.3%)
Peninsula                                  47% 62% (24.2%)       $529 $551 (3.9%)               $247 $341 (27.5%)
St. Regis/Luxury Collection        58% 70% (17.0%)       $342 $389 (12.1%)             $197 $271 (27.1%)
Ritz-Carlton                              57% 70% (18.7%)       $337 $376 (10.4%)             $192 $264 (27.1%)
Morgans                                65% 79% (18.0%)       $238 $319 (25.4%)      $154 $252 (38.9%)
Great Wolf                                 59% 64% (7.4%)         $252 $269 (6.3%)               $149 $172 (13.2%)
W                                             57% 72% (20.6%)   $226 $281 (19.5%)       $130 $203 (36.1%)
Le Meridien                           62% 67% (7.6%)         $209 $281 (25.7%)       $129 $188 (31.4%)
Gaylord                                   61% 77% (20.7%)       $185 $174 6.5%          $113 $134 (15.6%)
Renaissance                         63% 69% (9.0%)        $168 $175 (3.8%)        $105 $120 (12.5%)
Westin                                       60% 67% (10.3%)      $176 $198 (11.2%)             $105 $132 (20.4%)
Marriott                                     62% 68% (8.9%)         $168 $182 (7.7%)              $103 $123 (15.9%)
InterContinental                        60% 65% (8.0%)         $161 $170 (5.0%)               $97 $116 (16.1%)
Sheraton                                   56% 64% (12.3%)       $153 $175 (12.5%)             $74 $95 (22.2%)
Wyndham                               52% 62% (16.5%)    $125 $117 6.9%             $64 $72 (10.8%)
Crowne Plaza                             53% 56% (6.3%)         $105 $111 (4.9%)               $56 $66 (15.1%)

SOURCE: Hospitium

If you look specifically at those with the biggest percent change in ADR (Morgans, Le Meridien, W), you see they also have the biggest drop-offs in RevPAR. Then, if you look at those that either raised (Wyndham, Gaylord) or only cut a little, you see the RevPAR drop-off isn't as bad. This is definitely unscientific, as Peninsula's numbers show, but I do think it illustrates why, in general, industry experts constantly warn against cutting rate. RevPAR was taking a dive this year no matter what, but these numbers seem to show that cutting rate, while tempting, isn't an effective business model for surviving the downturn and only exacerbates the problem. So, it might be wise, instead of following the example of Undercutters (or anything that ever happened in Tom Green's career), to hold steady and try to come out ahead when the recovery arrives.

 

 

 


By :Chris Crowell



14 Jul, 2009
Twitter is for "old people?"

I am working on a story for our August issue of Hotel & Motel Management that looks at the revenue-generating power of mobile communication. Particularly when it comes to marketing, you can't say "mobile communication" without saying  "Twitter" in the same sentence. The people I work with here at our editorial offices know what a reluctant Twitterer (Tweeter?) I am, but hey--anything for a story, right? We'll see how long that lasts.

This morning our art director Amy sent me a link I absolutely had to share. Posted in London's Times Online, the story is about 15-year-old Matthew Robson and the report he wrote about the media consumption habits of young people, while on a two-week job experience internship at Morgan Stanley.

First you'll say, "No way!" then you might just believe him. Check it out here.

 


By :Stephanie Ricca



10 Jul, 2009
How guests actually use rooms as offices

One of the blogs I read regularly asked its readers what they do to make working from a hotel room a bearable experience. Number one on most commenters’ lists was to remove all literature/menus/magazines from the desk and put them somewhere else.

Some of the other comments were surprising to me, including the lengths they’ll go to make the furniture more ergonomic (laptops on ironing boards?)

Read the post to see how guests are using rooms to work in and what you might do to make the experience more pleasant.

http://unclutterer.com/2009/07/03/workspace-of-the-week-office-away-from-the-office/
 


By :Victoria Burt



30 Jun, 2009
Know your neighbors

When you think of cities poised to ride out the recession strong and intact, Cleveland might not come to mind. But one hotel in the heart of Cleveland is showcasing what can go right when a property partners with its neighborhood, goes after local business and plays a role in revitalizing an urban destination.

The Wyndham Cleveland at Playhouse Square was built in 1994, right next to the city’s theater block, which dated back to the 1920s. When the Wyndham opened, Playhouse Square was enjoying a revitalization effort that would restore Cleveland’s original theater spaces to their former grandeur along a section of downtown Cleveland’s Euclid Avenue.

Now, 15 years later, the Wyndham property recently completed a $4-million renovation in the middle of a recession and a major street construction project that left the surrounding sidewalks and streets torn up for months.

“There were some challenges, but it’s done now and it’s spectacular,” says Art Falco, president and CEO of the Playhouse Square board of trustees. The Playhouse Square Foundation owns the hotel, the theaters and the surrounding band of real estate, creating a unique partnership between hotel and neighborhood.

GM Brian Moloney works closely with Falco and his team to ensure the right connections are made to go after local business, and he maintains strong ties with Wyndham, which manages the property.

“There’s a lot more to my job than running a great hotel, but it’s been great,” Moloney says. “You have to understand your customer base. For us it’s the Cleveland Clinic and the theater district. They have been a couple of great home runs for us.”

 

Now with the renovations complete, Moloney is showcasing what Wyndham has to offer to locals and travelers.

Here are some highlights:

• Partnership with Playhouse Square neighborhood: Moloney calls the property’s theater affiliation “a huge, huge blessing.” Approximately 15 percent of its business is directly related to the theater organization. The hotel houses cast and crew, often for extended stays during a show’s run.

In addition, Moloney and his team market the hotel and its restaurants to theatergoers. The renovated Blue Bar attracts pre- and post-theatergoers, and overnight theater packages attract local Clevelanders who want to make a night of it.

What’s more, Moloney’s sales team can tap into the Playhouse Square customer database to directly market promotions at the hotel and restaurants to specific target audiences. “We’re constantly leveraging those relationships,” Moloney says.

Plus, Moloney promotes the Blue Bar and Encore restaurant to locals constantly. Office workers pop in for the lunch buffet (less than $10), and Moloney advertises executive chef Shawn Brozic, formerly with The Ritz-Carlton, Cleveland.

• Partnership with the Cleveland Clinic: Part of the street construction project that disrupted neighborhood activity over the last few years resulted in the installation of a new transit line running from downtown Cleveland to the Cleveland Clinic. Catering to the specific needs of Cleveland Clinic patients has become a specialty for Moloney’s team.

“Last year we did 2,000 rooms with the Cleveland Clinic and we’ve already exceeded that through May of this year,” he says.

The property is right on the transit line, making it simple for patient families to travel to the hospital facilities. In addition, the Wyndham often hosts Clinic meetings and events.

• Wyndham brand standards: As part of the renovation, the hotel’s guestrooms were outfitted with new Wyndham bedding packages, and all carry the signature Bath & Body Works branded amenities.

The brand’s loyalty program, Wyndham ByRequest, has been another home run, Moloney says. Three times a week, the property’s ByRequest manager hosts a wine reception in the lobby.



 


By :Stephanie Ricca



16 Jun, 2009
La Quinta gets urban

I attended the La Quinta Inn & Suites — Chicago Downtown location's grand opening celebration today. The property has 241 rooms and is located at the corner of Franklin and Madison in the Loop. It's an interesting strategy for the brand, which is more recognized for properties near busy interstates than in dense, urban locales.

La Quinta executives were quick to dispute that stereotype, pointing out their downtown locations in cities as varied as San Antonio, New Orleans, New York (Manhattan) and Austin. But make no mistake, this new $50+ million project, mostly financed from the company's cash flow, is a new flagship location and statement from the company.

 

 

The property is a result of a conversion of the old Jewish Federation Building (built in 1958), along with two newly constructed wings. Construction began in 2007. La Quinta, which made the use of CFLs a brand standard in 1999—years before some competitors—included a green roof at this location; 25 percent of the roof surface is covered by drought- and freeze-resistant plants. While the return on a green roof is harder to measure than some other sustainable practices, company president and CEO Wayne Goldberg said, "We've tried to put teeth in sustainability for La Quinta."

The property, which Goldberg says is performing admirably in a tough time in a tough market, has come up with some creative sales and marketing techniques. Staff recently stood out front of the hotel in La Quinta pajamas, handing out free breakfast and orange juice to pedestrians. Another day, they set up a bed in front, and gave anyone who would lay on the bed a prize. They even gave the bed away in a drawing when all was said and done.

La Quinta changed their original plans for the ground level, and moved the exercise facility and the meeting rooms from the first floor to the basement. And the breakfast space was moved from the first floor to the second floor. Instead, company officials realized, retail would be more in tune with the urban location. Already open is a tea shop, and a gourmet cupcake bakery as well as a deli will be opening in the coming months. But, according to Angelo Lombardi, EVP and COO, "We're a hotel business first." Thus, they chose to keep the hotel lobby on the first floor, instead of relegating it to the second floor. Goldberg explained that the team didn't like the experience of walking into a building, and having it not immediately feel like a hotel.

All in all, a nice move for La Quinta; it will be interesting to see whether franchisees will pick up the ball and run with it—that's likely the key question that will determine the future of this new urban model.

 


By :Paul J. Heney



15 Jun, 2009
Hotel-In-a-Box offers innovative bundled tech solutions

Picture this: You've finally decided to buy a new house, but instead of getting the whole house, you're going to buy it in parts. Today you're going to buy the roof, next week the basement, in six months the garage and next year you can afford the kitchen. Doesn't make much sense, does it?

Many times, getting all the pieces of the puzzle at the same time makes the most sense. That way you are sure the peices fit together, you can pay one bill, and you are ready to move in immediately.

Vendors offering tools in the hospitality technology industry have been operating as individual components forever, forcing hotel owners to buy one tool here, one there, yet another here and hoping they all work simultaneously. One vendor offers the best door locks, another the property-management system, another the wireless Internet network and yet another the cable television content.

In what could be considered an industry first, IBM and InterContinental Hotels Group have partnered to offer franchisees the first bundled package of its kind; at IHG's limited-service brands (Hotel Indigo, Candlewood Suites, Staybridge Suites and Holiday Inn Express), hotel owners building new properties have the option of purchasing many technology services from one vendor, called Hotel-In-a-Box.

"There are a number of benefits, the biggest being having one company that you trust that understands the complexities of a technology network," said Maurice Taylor, client services manager at IBM. "Hotel-In-a-Box won't allow them to make mistakes in selecting systems. It gives peace of mind that they deal with one company and they're selecting the right technologies."

HIB includes the design, development and management of the core systems needed to support a property, including property management, cabling and wiring, network design, guest high-speed Internet access, door locking, telephone switch and phones, video surveillance, voicemail,  business center implementation, high-definition television access and in-room entertainment.

"If they were to go out and buy these things themselves, they’d end up spending more money," Taylor said. "Because we’re leveraging IHG and IBM's buying power in the market, we're very much attempting to get them the best price in the market."

IHG and IBM have worked together for nearly 30 years in the technology space; about seven years ago the two partnered with Micros to roll out PMS solutions across the brand family. Micros develops the software; IBM is responsible for the deployment, integrating the peices and parts, testing it and installing it. Now that implementation will be taken to a new level as IHG's limited-service franchisees building new properties will have the option of IBM installing an entire intergrated system on top of the PMS.

"Right before a hotel opens, the owner has other issues to worry about," said Gustaaf Schrils, VP of hotel technology and services for IHG, who oversaw this partnership development from IHG's side. "The goal is to simplify the whole acquisition, procurement, training and support for the 40-plus systems that a typical owner needs to operate a hotel."

Currently, the HIB system is not mandatory for owners; only the Micros-IBM PMS is a brand standard they must adhere to. Franchisees have the option of installing the entire HIB solution or any portion of the package they want.

As it stands, the package is available to only IHG's limited-service brands. Future plans involve building a full-service package for the remaining brands, and possibly offering the product to other hotel parent companies.

"The next brands we are looking at are Holiday Inn and Crowne Plaza," Schrils said.

"We have a long-standing relationship with IHG, we have this trust, and we went into this agreement with IHG initially," Taylor said. "We would have to sign agreements with each of them independently, but we expect over time to exapnd it out to other companies."

As far as intergration with other third-party tools, such as yield management and central reservation systems, Schrils said the system was built in tested in an IHG laboratory with the intent of being as helpful to the franchisees as possible.

The first HIB solution was installed at a Holiday Inn Express in Spartanburg, S.C., last month.


By :Jason Q. Freed






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