You need look no further than the finely manicured lawns of the Arizona Biltmore Resort & Spa to see the condition of the U.S. hotel industry. Below the beautiful surface, there’s a cauldron of nervousness and downright fear that’s close to bubbling over.
There were a number of smiley faces put on by hotel executives throughout the conference, but like a delicious Kobe slider from Phoenix institution Durant’s Restaurant, they’re gone in an instant. That’s especially true when it appears to be near closing time for an industry that’s increasingly become more desperate to hear positive news.
As the wise Bill Reynolds of Thayer Lodging put it as the Lodging Conference was winding down in the Arizona desert: “It’s like being stuck in a deer blind … without any bourbon.” In other words, there needs to be some diversion while waiting … and waiting …and waiting for something to appear.
That was clearly the overwhelming feeling during the conference at the Biltmore. A feeling of helplessness that’s forcing almost everyone associated with the industry to hurry up and wait for the recovery to begin. Everyone, and I mean everyone, wants to get in on the action as soon as the recovery hits.
Take the host property for example. Normally a year-round bustling resort that attracts conferences from near and far, until last week’s Lodging Conference, the Biltmore had gone without a major meeting since LAST NOVEMBER! That’s 10 months without its bread and butter. It had so many financial-related conferences drop from its schedule during the first quarter of 2009, it’s a wonder how it has managed to stay operational.
|"We're at the mercy of the consumer right now," said Roger Bloss of Vantage Hospitality Group.
Andrew Stegen, the resort’s general manager, put on a happy face and was extremely outgoing in an interview with HotelNewsNow.com and a subsequent panel about returning to the basics. But when he told the panel that the gift shop sold 16 bottles of aspirin that morning, I could only imagine one was sold to him as he tries to survive what has become a nightmare for the entire industry, but more notably the operators of luxury resorts.
The nightmare for many hotel execs is that there’s simply nothing to do. There are few guests to entertain. There are a few small deals getting done for less than US$10 million. Other than that, it’s Deadsville, man.
Rick Pastorino of RevPAR International suggested this headline for Lodging Conference coverage: “Yawn.” A bit understated perhaps, but it hit the nail on the head. Still another suggestion from a source who requested anonymity: “There’s a whole lotta nothing going’ on.”
One of the more interesting comments heard at the conference came from Art Buser, president of Sunstone Hospitality, a real-estate investment trust that was forced to walk away from the W San Diego a couple of months ago. Buser called having to hand over the hotel’s keys to the bank embarrassing because as a kid growing up in Wisconsin, his moral compass included learning that paying your bills is what you’re supposed to do. That’s pretty candid talk from a hotel-industry leader, especially when most leaders tend to stick to carefully scripted answers. Buser went on to explain why the company had to walk away, and that because of making the easiest toughest decision in his life, the company will save US$40 million.
It’s comments like those that make attending a conference invaluable. Event organizers say 1,100 people or so turned out for the conference. With that number of attendees there’s always something to talk about—even with the lack of action in the industry.
Most public discussions during the conference turned to third-party Internet sites that appear to have taken control of a good chunk of the industry’s inventory again. As hotel operators continue to look for ways to make up lost revenue, they turn to these online travel agents to sell rooms. The result?
“We’re at the mercy of the consumer right now,” said Roger Bloss, president and CEO of Vantage Hospitality Group.
The discussions revealed most hotel executives know the industry screwed up by giving the OTAs so much inventory—six years after promising they wouldn’t do it again. But the need for cash was too strong for most operators to remember the promises they made after recovering from the 2001-2002 downturn.
But there were positive thoughts churned out at the conference, too.
Morris Lasky, one of the conference organizers, reminded everyone in the opening session these kinds of cycles produce tremendous opportunities, and this is the time to be patient and look at the possibilities.
But perhaps Tom Corcoran, chairman of FelCor Lodging Trust, summed it best, saying that until rate begins to increase, the industry won’t be able to begin a recovery.
“Following every downturn ever in the hotel business, we’ve had a great upturn,” he said. “The question is when, and I don’t have the answer. … (But) things are beginning to feel a lot better.”