The LA Times reported that hotel revenue from phone calls and in-room movies is drying up.  Not exactly shocking, but the details are pretty interesting.  From the article:

Annual revenue collected by U.S. hotels from phone calls dropped to an average of $178 per room in 2009 from $1,252 in 1999, a decline of 86%, according to Colliers PKF Hospitality Research.

The phone revenue decrease is a reminder to us of the good old days of outrageous phone charges and the guest complaints that went along with them.  It is hard to believe that only 10 years ago, hotels charged $5 a minute for long distance calls.  Most hotels even charged 25 cents a minute for toll free calls to capture some revenue from guests who used calling cards.  Phone revenues are now down 86 percent to about $.65 per room night. 

Meanwhile, income from in-room movies and games dropped to $126 per room from $171, a decline of 26%, according to the research firm.

In-room movies has fared much better and only declined 26 percent.  This small decrease is somewhat surprising considering how far technology has come in the last decade.  Guests now travel with laptops and have access to high speed internet everywhere.  Guests can watch DVDs are stream movies from services such as Netflix.  Laptops now even have a HDMI port so you can plug them directly into a television.  From the article:

In fact, by embracing the technology that guests demand, such as free Internet access, free computer applications and docking stations for iPod media players, hotels have cut off potential revenue sources. According to a recent survey by J.D. Power & Associates, 55% of U.S. hotels offer online access at no charge.

Technology will continue to eat away at hotel profits.  The traveler is more tech savy and more connected than ever.  We are going to have to continue to search for new revenue streams.

Bedbug Sniffing Beagle

The USA Today posted a good article on the rising incidents of bedbugs in the US.  You can check out the full article here.  The article links to a website, bedbugregistry.com, where over 20,000 travelers have posted their stories of their bedbug encounters.  The database has hotels from shady road side inns… to some of the top hotels in the country. 

We took a look at the hotels in Southern California and were surprised to see many top brands on the list… and many with multiple reports.  Bedbugs are a fact of life in the hotel industry.  Just like any other complaint, handling the problem properly will usually keep you away from this type of bad publicity. 

USA Today’s travel blog ‘Hotel Check-in’ is reporting that Hilton is going to be closing the reservation call center in Hemet, California and moving the call center to the Philippines.  Unfortunately, over 300 jobs will be eliminated in Hemet.  From the USA Today article:

“Hilton previously closed call centers in Illinois in 2008 and Pennsylvania last year, according to the Press-Enterprise. Some of the Pennsylvania workers had said they, too, went to the Philippines to train call-center workers, the paper says.

Hilton will offer employees positions at Hilton’s call centers in Carrollton, Texas, and Tampa, Fla., where workers make roughly $9 an hour, the story says. Those who don’t take the jobs will be offered severance packages.

Further details about the layoff aren’t available, because the employees told the paper that Hilton ordered them not to talk to the media – or, if they did, they’d lose their severance pay.”

Be sure to check out the full article by hitting the link above.  Warning:  there are are few hundred posts from very angry American’s following the article.  Here is a follow up article regarding the reader’s comments.

According to the Hotel Check-in section of the USA Today, guests are more satisfied with hotels during the downturn.  You can read the entire article and some pretty insightful comments here.  From the article:

“Hotel guests have generally been happier with their hotel experience in the past 12 months vs. the prior year as room rates dropped and crowds thinned, according to J.D. Power and Assoc.’s latest study that measures how well hotel chains satisfy their customers.”

The reasons for increased satisfaction according to the article:

“The travel downturn: With fewer people on the road, people who did travel found emptier hotels, which meant they encountered less competition for the treadmill in the fitness center, or less of a chance to stand in line at a busy convention hotel.”

“Cost: Hotel rates fell in the last 12 months, and customers generally felt more satisfied with what they received for their money.”

“Hotels operations: Hotels genuinely got better at pleasing their customers in the past year due to stiff competition for guests. “All of them are focused on improving guest satisfaction,” Schwartz says. Almost all of the chains increased their scores on a year-over-year basis – and not a single hotel chain saw its score drop significantly, he says.”

Our take:  It is somewhat surprising to see increased satisfaction as we are all battling with being understaffed.  Most hotels that we talk with have similar or higher occupancy but have much lower staffing levels because the ADRs are so low.  We believe that much of it comes down to cost.  Many guests are more satisfied simply because the rooms cost less and there is much more perceived value.

Yahoo Jobs released their 10 lowest paying jobs for workers with college degrees.  The study, found here, compares the salaries of workers in the middle of their careers.  Hospitality and tourism jobs have a starting salary of $37,000 and a mid-career salary of $54,300.  The worst paying jobs on the list also include drama, fine arts, education, horticulture, Spanish, music, theology, elementary education, and social work.

In the June 2010 issue of Consumer Reports, they have a special travel section that tells readers how to get great deals on travel.  They also announce their ratings for the year.  The hotel ratings, based on over 27,000 reader’s surveys, are somewhat surprising.  Consumer Reports has odd categories of hotels such as ‘fanciest’, ‘luxury’, and ‘upscale’.  The ‘upscale’ category for instance has both full service and limited service hotels.

The top score was a tie between Ritz-Carlton in the ‘fanciest’ category and Homewood Suites in the ‘upscale’ category.  The Homewood Suites scored an excellent in value and the Ritz scored very good. 

Here are the rankings for a couple of the categories:

(more…)

A really good article from USA Today about hotel’s struggling to survive.  Check out the full article on USA Today’s website. 

The article features some high profile hotel closures such as the W Hotel in San Diego and the Ritz-Carlton in Las Vegas.  The article also mentions how 76 California hotels have already fallen into foreclosure and that 330 out of the states 10,000 hotels have defaulted on their mortgage payments in the last year. 

As far as the cuts, the article really only mentions that Concierges are being replaced by lower cost employees and some hotels are changing their approach to food and beverage.

We have noticed quite a few changes at hotels over the last year or so to cut costs or drive revenues.  A few of the changes we see:

• Many hotels have closed restaurants and bars.  Instead of having 2 or 3, many have closed all but one restaurant and one bar.
• Hotels have cut costs and gone green by eliminating newspapers and printed folios.
• Parking rates are on the rise.  Many hotels have increased the parking fees for both self parking and valet parking.
• Breakfast buffets have really been changing.  The prices have increased and the quality and selection of food has decreased.
• Overall staffing has really decreased.  Many hotels have eliminated positions like bellmen or concierges.  Also, we see longer lines at check in because the hotels have less GSAs with similar occupancy as in the past.

What are you doing to survive?  Please post in our comment section!

Hilton is taking a lot of heat after announcing they will change the number of points required to book a free night stay, essentially devaluing their Hilton Honors points by about 20 percent.  Check out the full USA Today article and the nasty comments, here. 

Our take:  We agree with the travel industry analyst who said ‘it is the absolutely the wrong decision to make at a time when hotel demand is down from corporate business, conferences and leisure.”  It will save cash, but the timing is very poor.

In a follow up post, found here, three other brands seemed to distance themselves from Hilton’s strategy. 

Our favorite comment was from IHG’s Jim Abrahamson who said that rewards members are twice as profitable and elite-level members are 12 times as profitable.  He goes on to say “if one platinum-level member leaves us, we’d have to go out and find 12 new customers just to replace that one.”

Good article today in the LA Times titled ‘Hotel defaults, foreclosures rise in California’.  The article says that more than 300 hotels in California were in foreclosure or default as of September 30th, 2009.  In Southern California alone, there are 140 hotels in default or foreclosure.  The main problem is that many hotel loans were expected to be repaid within 5 or 10 years and were financed at the peak of the market.  The author also blames loose lending and irrantional exuberance. 

Smith Travel Research is predicting no significant improvement for the hotel industry until 2011 at the earliest.

A Hilton Hotel in Portland, Oregon is preparing to shut down for 4 weeks to save money.  The hotel is the largest in the state of Oregon.  The hotel consists of two different towers located across the street from each other.  One of the towers will remain open.  The story was originally reported in the Oregonian and can be found here.

Our take:  This story has been picked up by many news outlets and is being used to show how badly hotels are hurting.  The main problem in that area is the 500 new hotel rooms that opened recently.  We think the hotel is just being smart and planning ahead.  Even in good times, many hotels close floors or even entire towers for weeks or months at a time.  Closing floors can save a lot of money on cleaning and energy costs if the demand for the rooms is not there. 

The story does a good job of reminding us all to take a look at our upcoming forecasts.  Do we have an opportunity to close floors and reduce costs?