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Hotel executives talk shop over dinner in Memphis
February 19 2010

At the 8th annual Presidents’ Dinner, senior hotel executives discussed such topics as rate, sustainability, appraisals and timing of an industry turnaround.

MEMPHIS, Tennessee—Inside a private room at Paulette’s Restaurant, nearly 20 senior hotel industry officials dished on 11 February about the state of the industry over plates of rack of lamb, filet mignon, ginger-crusted salmon and chicken breast in a white wine cream sauce.

The occasion was the 8th annual Presidents’ Dinner, organized by Pinkowski & Company and co-sponsored by The Allied Group and U.S. Foodservice. The topics bantered about were many, and included discussions surrounding rate, whether sustainability is a fad that will pass, appraisals and when a turnaround might occur.

Read, “Blog: Notes from a closed-door, hotel executive meeting.”

Here’s a more in-depth look at some of the major topics of dinner conversation.

Rate integrity

Chuck Pinkowski, founder of Pinkowski & Company, said the economy will have to improve before rates make a strong move upward.

Gloria McCollum of Pinkowski & Company and Bob Hunter of Hunter Realty Associates listen as Larry Wright Sr. of Wright Investments makes a point during the 8th annual Presidents’ Dinner in Memphis.
“We’re going to have to see positive employment numbers before rates come back strong,” he said.

Greg Averbuch, president of Summit Management Corporation, said the luxury market was among the most affected by deteriorating rates.

“I think probably it’s a lot more lacking in the big box and luxury properties,” he said.

Bob Hunter, CEO of Hunter Realty Associates, said more travelers, especially groups, are bypassing luxury.

“Instead of staying in high-end hotels,” he said, “they’ve bumped down to select-service hotels.”

Jim O’Brien, executive VP of Wilson Hotel Management Company in Memphis, said he thought rates had at least been holding ground, even with the downturn.

There was some discussion that a solid loyalty program can help a hotel keep its business. But Mary Calorio, GM of the Heartbreak Hotel in Memphis, said that’s not necessarily the case.

She said that because her hotel has such a unique place in the tourism market, it hasn’t needed a rewards or loyalty program.

“You get to see Elvis,” she said. “It’s never been an issue.”

Appraisals

One interesting development noted by Hunter was appraisals. He said brokers increasingly are being asked by banks to perform appraisals on properties, a service that typically is done for free with the hope that they will be retained by the banks in the selling of the property.

But, Hunter said, the banks instead are taking advantage of that service by getting a free appraisal, and then not selling the property in question

Hunter said his firm has been asked to do a lot of appraisals of late, as well.

“We’re not charging for appraisals, but banks aren’t selling the properties,” he said. “At some point, the brokers are going to say, ‘You’re running us out of business.’”

Hunter said the advice he has been giving to clients amounted to: “If you don’t have to sell, don’t.”

In retrospect, he said, that might not have been the best advice.

“Our advice really was wrong,” he said. “It should’ve been: ‘Sell quick.’”

Going green

There was nearly unanimous consensus around the table that sustainability is more than just a fad. Rather, the executives said green hotels will continue to be in demand from both guests and government.

William J. Crosby, director of business development for construction services company The Allied Group, said sustainability is likely to become part of the building code.

Still, Gloria McCollum, a consultant with Pinkowski & Company, and Wayne Tabor, GM of the Holiday Inn Select Downtown Memphis, argued over whether sustainability is a fad that will pass.

McCollum said younger travelers in their 20s and 30s are increasingly looking for green hotels and passing on those hotels that are not green.

Tabor, though, questioned whether those 20- and 30-somethings would demand green hotels if the cost hit them in the pocketbook.

“It costs money to be green,” he said. “If you’re going to build a green hotel, you need rate to construct that green hotel.”

McCollum countered by saying she believes younger guests will continue to seek out sustainability, even if the rate is higher.

And for those hoteliers that want to jump on the green bandwagon, now may be the time to do it, Crosby said.

“Now is the time to renovate,” he said. “Work can be found cheap.”

The turnaround

Speaking of the economy, the gathered executives also took turns commenting on when the hotel industry might see a turnaround.

Averbuch said that he perceived the economy to be “improving.” “Or at least it’s stabilizing in the coming months,” he said.

Pinkowski said he had noted some encouraging signs, as well. He said he had seen reports that demand had improved during the fourth quarter of 2009. “But how bad was 2008?” he asked.

He added that he does not see rates coming back until 2011.

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