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!

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.

In this time of recession, there has been widespread panic throughout the hotel industry.  With much lower occupancy forecasts, hotel managers have been trying to prepare for 2009 as it seems like it will be a grim year.  But what are some of these managers doing?  Some hotels have been laying off employees to meet the demand, finding any way to cut some costs, and even working hourly shifts themselves to save some money.  But is this really the right way to do things?  We will provide you with a new perspective and maybe you will begin to look at your operations in a new light.  You will find that your job as a manager should mean more than trying to catch up to the present.

If you think about your job description as a manager, what does it contain?  Is it to remedy situations and deal with issues as they arise?  Or is it to strategically plan and steadily improve the hotel as a whole in the long-term?  If it was written well, your job description should include a combination of both of these areas.  Unfortunately, at a time of a worsening economy and with the uncertainty of where your next dollar of revenue will come from, it is hard for managers to think of anything else than the short-term.  They begin cutting employee shifts, finding cheaper supplies, and doing anything they can to make that bottom line more attractive.  Though yes, some of the cost cutting is necessary to meet the lower demands, do the managers have the correct mentality when they are going about these profit saving measures?  My guess is no.  The managers are usually just thinking, “How can I get this month’s P&L looking good even though we are not getting any business?”  Newsflash!  If you have no revenues, your profit line will not look good no matter what you try to do! 

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