According to an article by Alan X. Reay that appears on hotelnewsnow.com, the number of CA hotels in default or foreclosed on jumped 125 percent in the last 60 days and the state now has 31 hotels that have been foreclosed on and 175 in default.  Not suprisingly, about 87 percent of the hotels in default are non-franchised hotels.  Also, 75 percent of the hotels that are in default were either purchased or refinanced between 2005 and 2007. 

The author estimates that hotel values are currently 50-80% lower than the peak as a result of declining revenues.

In a new article posted on the Wall Street Journal’s website, the author catches hotels piling on extra fees to make up for a loss in room revenue.  Some of the fees that they have found are mandatory valet parking fees, increased resort fees, housekeeping and bellman mandatory gratuities, and other fees such as a mandatory fee for in room safes. 

Should you be adding fees like these to make up for a loss in room revenues?  Absolutely not. 

First off, mandatory fees are often illegal.  The article describes how Wyndham Worldwide and Marriott were sued and settled with the Florida’s Attorney General over adding mandatory surcharges.  The Florida AG aslo has six ongoing investigations.  Undisclosed energy surcharges (we all remember those) and in-room safe fees are among the issues being investigated. 

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Extended Stay Hotels has more than 680 properties under brands like Extended Stay America and Homestead Studio Suites. 

Bloomberg is reporting that they filed bankruptcy on June 15th because they are ‘significantly over-leverged and the projected cash flows cannot continue to service over $7 billion in debt’.  Extended Stay Hotels employs about 10,000 people.

One of our favorite finance and economics blog, Calculated Risk, is reporting that hotel’s RevPAR over the last 12 months has sunk 22.9 percent.  Year over year occupancy has shrunk by 13.9 percent. 

Be sure to click on the link to see a great chart that they put together that shows the year over year change in occupancy since 2001.

The W Hotel in San Diego basically foreclosed itself last week, telling their lender to take over as they would no longer be able to pay its mortgage payments.  The hotel owner, Sunstone Hotels, made its decision as their low cash flows were no longer sufficient to continue with the property.

Unfortunately, this may become more common as other companies continue to evaluate their portfolios while they are struggling to get out of this recession.  There is no word on whether the hotel will continue its operations in the hands of the bank.  Read the full article here.

In the newest results (First Quarter 2009, released May 19, 2009), The American Customer Satisfaction Index is reporting that Hilton Hotels has passed Marriott Hotels in customer satisfaction.  The ACSI ranks different types of businesses each quarter in customer satisfaction.  This quarter they ranked hotels, airlines, cable television, fast food, and utility companies.  The hotel scores come out once per year.  You can read the full report at their website.

Hilton scored a 79 (a 1 percent increase) while Marriott scored a 77 (a 1 percent decrease).  Hyatt’s scores have plunged 5 percent since last year and now two budget brands (Choice Hotels and Best Western) actually scored higher.  Wyndham scored the worst of any hotel.  Here are the 2009 rankings from best to worst:

1. Hilton
2. Marriott
3. Choice Hotels
4. Best Western
5. InterContinental
6. Hyatt
7. Starwood
8. Wyndham

Overall, despite the rough times that hotels have faced in the last year, the average score in the industry remains unchanged.  However, that is mainly due to guest’s satisfaction with the budget hotels.  Both Choice Hotels and Best Western had a 7 percent increase since last year.

Our take:  Guest are certainly demanding more and it shows.  While it is great to see that overall satisfaction is unchanged, it is tough to see that the budget brands are passing the luxury hotels.  Once luxury brands lose guests to budget brands, it is very difficult to get them back.  What do you think?  Is your hotel losing guests to another brand?  Post your comments below!

We know that times are tough for most hotels right now.  But be glad you don’t have the problem that the Sportsman’s Lodge in Studio City, CA has.  Last July, the Los Angeles Daily News ran an article in their business section annoucing that the hotel will be closing.  The hotel was a bit of a legend for many locals.  It seems that everyone in the area has a story to tell about the Sportsman.  The problem, the hotel never intended to close.  There was miscommunication between the hotel owner and the Daily News reporter.  Of course they printed a correction the next day but the damage was already done.  Word spread quickly.  Past guests posted their stories of their great experiences at the hotel and said how much they would miss it on the Daily News website.

Even today, many months later, there is a big banner on the front of the hotel that says ‘hotel is still open’.  So as tough as things are for you right now, be grateful that people know your hotel is open!

Just a sign of the tough times the hotel business is facing.  The LA Times is reporting that the owner of the Downtown L.A. Marriott has filed for bankruptcy in an attempt to keep the hotel open for business.

The hotel has been owned by Ezri Namvar since 2007.

The hotel is located in the heart of downtown Los Angeles’ financial district and is very close the LA Live.

It is a great hotel and we wish them luck.

Four Seasons Hotels & Resorts (12th place), Ritz-Carlton (5th), and JW Marriott (25th) all made the top 25 of BusinessWeek’s annual best companies for customer service.  All three hotel brands received an ‘A’ on both Quality of Staff and Efficiency of Service.  All three also scored about 50 percent on Definitely Would Recommend Brand.  JW Marriott did the best on Will Definitely Repurchase by scoring 48 percent, a tremendous score for a hotel.

Other travel companies that made the list were Jetblue Airlines (19) and Enterprise Rent-A-Car (16).

To view the full list on BusinessWeek’s website, click here.

USA Today posted a pretty good article titled ‘As Hotels Struggle For Business, Some Guests Find An Upside’. Click on the link to read the entire article on their website.

The article talks about how guests are finding much better deals on hotel rooms now then ever before, especially at luxury hotels.  But the most important part of the article is the section titled ‘Guests Notice Cutbacks’.  From the article:Hotels cannot hide all the cutbacks. Some frequent travelers say they’re starting to notice little things.  From the article:

Some amenities — such as a bottle of water in the room or a newspaper delivered to the door — are gone. The quality of complimentary food and beverages has diminished in some club rooms or lobbies, or at hotel managers’ guest receptions, they say.

Because many hotels have cut their staffs, frequent travelers say they’re waiting longer to check in and out, have rooms made up and have cars retrieved by valets.

“There are fewer people to provide basic services, answer questions and make suggestions for restaurants and activities,” says Howard Knoff, an education consultant in Little Rock.

 

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