REPORT FROM THE U.S.—The oil might have subsided, but lackluster performance among Gulf Coast hotels won’t wash away.
A new market-level analysis of hotel performance along the Gulf Coast suggests more devastating impacts than previously reported, according to research firm STR Analytics, a division of STR, as is HotelNewsNow.com.
Of the 27 market tracts along the Gulf Coast with enough reporting properties to be statistically significant, 22 lagged the total United States hotel industry in year-over-year, revenue-per-available-room growth during June 2010. Of those, eight reported RevPAR declines.
The U.S. hotel industry posted a 10.3% RevPAR increase during June.
Previous reports, which viewed the region in aggregate, showed some resiliency in the months following the 20 April Deepwater Horizon oil spill, when hotel performance was bolstered by the influx of clean-up crews and government officials, said Carter Wilson, director at STR Analytics.
“Yes, the coast had some support because of clean-up crews,” he said. “However, drilling down to specific census tracts reveals that there was some damage.”
The new data underscores the need for hoteliers to file claims with the Gulf Coast Claims Facility—and soon. The deadline for emergency fund relief is 23 November.
“You cannot lose by filing for a short-term loss. There’s no downside to it other than the time it takes to file a claim,” said Keith Overton, senior VP and COO of TradeWinds Island Resorts in St. Petersburg, Florida.
Overton, who also serves as chairman of the Florida Restaurant & Lodging Association, filed a six-month emergency claim of US$1.15 million. While he has yet to receive a check from the GCCF, he received confirmation from GCCF administrator Ken Feinberg that the claim is compensable and will get refunded.
“I expect that we will get paid in full, but I do not have confirmation of that,” Overton said.
Filing a claim
In order to recoup losses incurred from the oil spill, hoteliers must file claims with the GCCF.
The GCCF was created in direct response to the devastating effects of the oil spill. The fund comprises US$20 billion in escrow payments from BP to compensate business and individuals who suffered losses. Payouts are administered and distributed by the GCCF, which is an independent claims facility managed by Ken Feinberg.
Feinberg’s fees and expenses are paid via funding from BP, though the administrator does not report to BP and BP does not control his decisions, according to an overview on the GCCF website.
Who should file? Any hotelier who has incurred damages as a result of the oil spill should submit a claim to the GCCF. This includes hoteliers along the Gulf Coast in areas where oil has not washed ashore.
Previously, geographic proximity to oil was a prerequisite for filing a claim. However, a campaign led by the Florida Restaurant & Lodging Association revealed how harmful the negative perception of the oil spill was to area businesses—regardless of whether oil was actually present. Feinberg acquiesced and on 4 October announced geographic proximity to the oil spill would not prevent a legitimate individual or business claim from being processed.
“I have heard from elected officials in Florida, including Governor Crist, Attorney General McCollum, CFO Sink and others, about their concerns regarding Floridians’ proximity to the spill and how, regardless of distance, there has been economic impact beyond the areas closest to the spill,” he said in a statement. “After listening to these concerns, I have concluded that a geographic test to determine eligibility regarding economic harm due to the oil spill is unwarranted.”
Hoteliers unsure about whether they have a legitimate claim should file nonetheless, said Bruce Craul, COO of Legendary Hospitality in Destin, Florida, who is still waiting for payment from his own claim.
“We need to tell everybody to file a claim,” he said. “There’s a lot that haven’t filed because they think they don’t deserve a claim. They shouldn’t make that decision. The entire state of Florida was affected, as was Mississippi, Louisiana and Alabama. … It doesn’t matter if you were up from last year. How much are you down from what you were going to do?”
When should you file? If hoteliers want to file for interim or emergency advance payments—something which the sources interviewed for this article suggest they do—they need to submit their claims no later than 23 November. Interim payouts are distributed on a monthly basis, while emergency payouts are distributed in a lump sum for a six-month period.
All payouts received as part of the interim and emergency payments will be deducted from the final payment. There is no deadline nor is there much guidance yet for filing final claims.
How do you file a claim? Claims can be filed through the GCCF website, telephone, mail or fax, or by visiting a GCCF claims site office. For more details and contact information, visit the GCCF website.
You can also download a detailed claims filing instruction document here.
What do you need to file a claim? In addition to the official claims documents, you need detailed information that accurately measures financial losses directly attributable to the oil spill.
“Start now preparing documents, gathering historical profits and your projections for this year,” said Robin Greenwald, attorney at Weitz & Luxenberg, which is one of three firms working with the FRLA to help members navigate the claims process.
It’s not enough to show how performance compares to last year, Greenwald said. The downturn was in full force during 2009, and many hoteliers projected a banner year in terms of performance increases during 2010. A good question to ask is, “Where would you be today if April 20 had not happened?” she said.
Sources recommended using outside help to compile and model all of the necessary information to make your case. At Legendary Hospitality, for example, Craul hired a retired CFO from a respected hotel company to process the data. Overton hired an attorney to do the same at TradeWinds. “Seek legal guidance because you don’t want to file a claim that leaves money,” he said.
Information and modeling must take into account future losses, Greenwald said. “It’s not just what would you have made in 2010, but also how many years forward will this likely affect you?”
How else can you seek compensation? BP is not the only party at fault for the oil spill. Therefore, Greenwald advises all claimants to file a lawsuit, too. Doing so allows hoteliers to recoup damages from all parties involved and it introduces an extra incentive for the GCCF to handle your claim fairly.
Hoteliers do not have to sign a waiver when filing for interim and emergency advanced payments. However, they do have to sign a waiver of rights, which prevents claimants from seeking additional damages from BP in the future, when filing for final payments.