IHG TO BUILD FIVE-STAR GOLF HOTEL IN MUSCAT

Original Story: ConstructionWeekOnline.com

InterContinental Hotels Group (IHG) is to team up with Muscat Golf Course Project to deliver a five-star hotel near Muscat International Airport.

The project is scheduled to commence towards the end of 2014 with a completion date scheduled for the end of 2016, according to a statement released by IHG.

InterContinental Hotel & Golf Clubhouse will have a built-up area of 50,000m² and feature 270 guest rooms.

The project will also include leisure facilities with two tennis courts and three outdoor swimming pools and spa facilities with “hammam”, gymnasium and treatment rooms, two full service speciality restaurants and one all-day dining restaurant, ballroom and fully equipped meeting facilities and enhanced business services.

Muscat Hills Golf Course is located between the mountains and the sea and comprises an 18-hole PGA-certified green golf course.  The hotel may be reviewing a Miniature Golf Course Design to expand customer satisfaction.

IHG manages a number of hotels in Oman including InterContinental Muscat, Crowne Plaza Muscat, Crowne Plaza Sohar, Crowne Plaza Salalah, Crowne Plaza in Duqm and Holiday Inn in Muscat.

Hotels Catering to Private Business Meetings

Story first appeared in USA Today.

Hotels have found a new business opportunity in today's mobile, technology-driven world: selling small, tech-equipped meeting rooms for private business gatherings.

Westin today will announce a pilot program to replace at least some of its old-fashioned hotel business centers with contemporary meeting rooms that offer some privacy.

After about a year of research into the mobile traveler of today, Westin is convinced that more people want to collaborate on the fly and that they're willing to pay for a quiet space that's away from the bustling hotel lobby, with comfortable and functional furniture.

Westin's announcement comes as hotels such as the Westin Arlington in Virginia, Marriott Redmond in Washington state and Ace Hotel in New York City have seen their couch-filled lobbies turn into popular gathering spots.

The trend in small meeting rooms reflects how hotels seek to meet the varied needs of guests who don't want to meet in lobbies or in their rooms to conduct business. It's a way that hotels can attract professionals living nearby who don't have an office but don't want to go to Starbucks to plug in and meet a client or conduct business.

And the meeting rooms don't cost as much as a regular hotel room or a traditionally large meeting room. Hotels are learning that they can have multiple uses per day. Although the the small meeting rooms may not generate the food and beverage revenue like traditional, all-day meetings, there still can be more total revenue if enough people rent them each day.

Two Westin hotels have Project Hive work spaces. One is the Westin in Arlington, Va., where the 260-square-foot space rents for $50 an hour.

The experience

In the lobby of the Westin Arlington on Thursday, business people were working on laptops in a group, solo travelers checked their smartphones and friends mingled with drinks. In contrast, the hotel's Hive workspace offered quiet, privacy and a high-end sound system in a bright, white room with white furniture.

There's enough glass around the meeting room to entice the interest of passersby.

To advertise the Hive's availability, the hotel has prominent signs, and it's being promoted on LiquidSpace.com, a website that shows available office space.

Inside the Hive is a bar-high, square table with four white stools in front of two large computer screens. Several people can connect their mobile devices and talk via Skype, collaborate on a PowerPoint presentation or watch a video together. For the hourly fee, users can also take advantage of white boards, soft drinks in a small refrigerator, snacks, a couch and a separate TV to play Xbox 360.

Marriott also has been experimenting with how to present meeting space for smaller groups of people intent on collaborating, although its new rooms, called Workspring by Marriott, aren't yet seen as a replacement for a hotel's business center.

Marriott plans to create meeting rooms that are decked out with technology, flexible living room furniture, power outlets and snacks.

A Marriott spokeswoman, says the new, smaller rooms will take the place of some of its larger meeting rooms that aren't being used as much as they were in the past. It's for small meetings for people who aren't necessarily staying at the hotels.

This month, construction will begin on the first Workspring room in the grand ballroom at the Marriott in Redmond, Wash., home to Microsoft and Nintendo.

The ballroom will be cut into smaller, tech-equipped meeting rooms that will be more suitable to the type of collaborative meetings popular with tech companies. The rooms are expected to open by the end of August. Pricing hasn't been determined.

New York University's Hanson says hotels are just learning how to price the smaller rooms. But, he says, prices such as $50 an hour probably are to test the market and will increase over time.

The furniture in the Westin and Marriott meeting rooms will be made by high-end, design-conscious furniture maker Steelcase.
In New York City last year, the futuristic Yotel pioneered the small meeting room concept when it opened.

The independently operated hotel lined its bare-bones, concrete-floored lobby with glass-enclosed meeting rooms with all-white furniture, TV screens and plenty of electrical outlets.


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Cities, States in Hotel Tax War with Orbitz, Expedia, others

USA Today

 

The last time you went on vacation or hit the road for work, chances are you scanned the hotel bill but barely gave the taxes that were tacked on a thought.

Yet those taxes, paid for occupying a hotel room, are at the root of battles being waged in courts across the U.S. between online travel booking sites and cities and states that say they're not getting their fair share.

The crux is whether occupancy taxes should be based on the discounted rate online companies such as Expedia (EXPE) and Orbitz (OWW) negotiate with and pay to hotels, or the higher, retail room rate actually paid by guests. Online travel companies pocket the difference as their fee.

The discrepancy over the proper tax amount has led some local governments to rewrite ordinances and to at least 40 lawsuits filed by those on both sides of the issue.

Government officials say cities are losing an estimated $1 billion a year in revenue that would go toward promoting tourism and in some cases, paying for schools, law enforcement and other municipal services. Those dollars are especially important during the current economic downturn, some say, when treasuries are lean and every penny counts.

Online travel companies, meanwhile, have taken their case to Capitol Hill, where they're lobbying for federal legislation that would declare that the taxable amount should not include their fees or income.

"Cities provide ... education, social welfare infrastructure, roads, highways and these have a cost," says Lars Etzkorn, program director for the National League of Cities. "Certainly any time that a dollar is owed to government and it's not paid ... then it has to be made up somewhere, or there's going to be a cut in service.

Etzkorn says there's "a basic equity" question involved because consumers think they're paying a tax that is going to a public good, not to private profit. "So," he says, "it's smoke and mirrors."

But Andrew Weinstein, spokesman for the Interactive Travel Services Association, disagrees. Based on several legal rulings, he says, taxes are to be paid based on the amount the hotel actually receives.

"Occupancy taxes are based on the rate the hotel sets and receives," he says, "not the profits, fees or commissions of its partners. ... The facilitation fees are no more part of the hotel rate than the taxi that takes the guest from the airport or the tip they give the bellhop."

Online travel sites take a cut

Consumers basically pay the same overall amount whether they book a room directly with a hotel or through a third-party site, travel industry and government representatives say.

"The difference is how that money is divided up later on," says Marlene Colucci, executive vice president for public policy at the American Hotel & Lodging Association.

For instance, a consumer pays a room rate of $100. A local occupancy tax of 10% tacks on another $10, and so the guest pays $110.

But an online travel site may have negotiated a discounted room rate of $80 with that hotel. A guest who booked through that third-party portal still pays $110, but the online company will give the hotel $80 for the room, plus $8 for the tax, keeping the remaining $22 as its fee. If the room had been booked directly with the hotel, the municipality would receive $10 in taxes.

Several cities argue that they are owed that $10 regardless of how the guest reserved the room. New York City revised its ordinance in September 2009 to make it clear that taxes are owed on what the consumer pays.

"Our goal is to make sure that everyone plays by the same rules," says David Frankel, New York City's finance commissioner. "By closing this loophole, we have ensured that the hotel occupancy tax is the same whether you booked a room directly with a hotel, through a travel agent or over the Internet."

Baltimore similarly amended its law in September 2007 but has been in litigation for more than two years with Expedia, Travelocity and Hotels.com, says George Nilson, Baltimore's city solicitor.

Occupancy taxes typically go toward efforts to draw visitors, and the revenue they bring to a community, and sometimes local services. At a time when many city and state budgets are stretched, some local officials say hotel tax dollars are vital.

"Obviously funds are short all around, and we think it's important that everyone on which a tax is properly imposed should be paying that full amount of tax," says Daniel Cantu-Hertzler, chair of the corporate and tax group for Philadelphia's law department. "It's only fair."

Hotel guests in Philadelphia pay city occupancy taxes totaling 8.2%, and the taxes remitted by online travel companies are falling short by hundreds of thousands of dollars a year, Cantu-Hertzler says.

When the city told Expedia in 2007 that it was remitting less than the tax amount due and to pay up, the travel site filed an appeal with the local tax-review board, which ruled in its favor.

Now the city has appealed that decision to the local court of common pleas and is expecting a ruling next month. "I would not be surprised if whichever side doesn't prevail takes an appeal further," Cantu-Hertzler says.

Legal fights go to appeals

The legal back-and-forth in Philadelphia is typical of what's happening across the country. And decisions by tax authorities and courts have varied.

While Philadelphia's tax-review board backed Expedia, the Superior Court of Fulton County, Ga., issued an order in July stating that 17 online travel companies must pay taxes to the city of Atlanta based on the higher rate charged the customer.

Both sides are appealing that ruling. The city of Atlanta has filed because the order didn't make online companies pay back taxes, and the online companies do not agree with the court's ruling, says Reese McCranie, a city spokesman.

The decision by some municipalities to amend their laws, often drafted before online travel companies even existed, hasn't been enough to make online companies automatically comply, or to override their argument that their fees are not subject to occupancy taxes, says Bill Carroll, a senior lecturer with Cornell University's school of hotel administration.

"It's fuzzy," Carroll says of the issue. "There's no good guys. There's no bad guys. The law is not clear. I would hate to be judging this."

Lawsuits brought by the city of Columbus, Ga., against Expedia, Hotels.com and Orbitz led several online travel companies in late 2008 to refuse to list Columbus hotel rooms on their sites, says Trip Tomlinson, a lead attorney in the three cases.

"We (could) find Columbus, Miss., and Columbus, Texas," but not Columbus, Ga., he said of at least one site. "Not only did they de-list all hotels, they've written Columbus, Ga., off the map."

The Georgia Supreme Court sided with the city.

But the online companies have their supporters. On the rare occasions when a traditional travel agent would negotiate a discounted rate, they'd handle the remitting of taxes the same as their online counterparts, says Paul Ruden, senior vice president for legal and industry affairs for the American Society of Travel Agents.

"The problem is occupancy taxes that are in dispute are being attached to the income of the agents, and the taxes on books were never contemplated to do that," Ruden says, adding that the online company fees are already taxed separately as income.

Kevin Mitchell of the Business Travel Coalition agrees. "If you gave me $5 to buy you a $4 latte, including (a) city beverage tax at Starbucks, with an understanding that I would keep $1 for my services, would anyone seriously suggest that my $1 should be separately subjected to the city beverage tax? Sure, I'd pay income taxes on the buck I made, but I'm an intermediary providing an added-value service and not Starbucks providing coffee."

Travelers split on the issue

Though the room rate offered to consumers by an online site is generally the same as that advertised by the hotel, there may be times when an online site offers a price that is lower. Consumers may also find a better deal on a hotel's own site than they would with an online travel company.

Regardless of whatever guests pay when booking through a third-party site, the disputes hinge on whether taxes should be based on that amount or the lower rate the site has negotiated with the hotel.

Many frequent travelers appear split on the issue, too. Some say the actions of the online companies seem unfair or even dishonest.

"It is misleading," says Tracey Lane, who owns a small business and lives in Fair Lawn, N.J. "It begs an integrity issue, as far as I am concerned. Everyone is entitled to make a living. However, above-board works best."

Others say it is much ado about nothing.

"If the price I'm presented is a fair one, I don't particularly care what arrangement the site has with the property, or who ends up with what part of what I paid," says Bob Beilstein of North Syracuse, N.Y.

Travel industry representatives say the disputes have larger ramifications. Weinstein says his organization has drafted language for possible federal legislation that would stave off a potentially dizzying array of local standards and statutes.

"We think it'll create a massive shock wave through the travel industry if you end up with all these local municipalities attempting to create their own standards on this issue," Weinstein says. "The bill also makes clear that states can pass whatever business taxes they want on travel intermediaries or other entities, just not occupancy taxes."

But if online companies can pay taxes based on a wholesale rate, government officials and organizations fear others can make the same argument, and the consumer could eventually feel it when municipalities find other ways to raise revenue.

"To the extent (a city) doesn't enforce those laws against one entity, that could easily lead to other entities around communities deciding they don't want to pay taxes due, either," Tomlinson says.

Spa Resorts Try `Naked Table' Building, Yoga to Lure Executives‏

Bloomberg

Spa resorts such as Vermont’s Stowe Mountain Lodge and the Broadmoor in Colorado are using wall climbing, carpentry classes and yoga to lure corporate clients accustomed to little more than free breakfast as a hotel perk.

Stowe Mountain has boosted its corporate group bookings with such programs as the “Naked Table Project,” in which participants learn to build furniture from scratch. At the Miraval Arizona Resort & Spa in Tucson, guests can use meeting breaks to walk a tightrope or jump from a 25-foot (8-meter) pole, an activity known as the “Quantum Leap.”

Luxury hotels, hurt more than their cheaper competitors by last year’s U.S. recession, are working to reverse a drop in demand from business travelers. Spa resorts, upscale properties with a focus on health treatments and other recreational activities, are among those that have had the toughest time booking corporations, which became thriftier during the slump.

“These have been challenging times, but during these last two years, our programs have helped to attract corporate groups,” said Morgan Fukumoto, a spokeswoman for Stowe Mountain in Stowe, Vermont. “They look for more team-building activities and to get a great value for their money.”

Hotel occupancies in the top 25 U.S. markets climbed to 65 percent this year through August from 61 percent a year earlier, according to Smith Travel Research Inc. of Hendersonville, Tennessee. Luxury properties, which include spa resorts, showed the biggest increases, with occupancies rising to 67 percent from 62 percent.

Trailblazers Meeting

Chains including Marriott International Inc., Blackstone Group LP’s Hilton Worldwide and Hyatt Hotels Corp. have offered complimentary breakfast and Internet access to attract corporate customers. At Miraval -- majority owned by Revolution LLC, the investment company run by AOL Inc. co-founder Steve Case -- guests can test their skills on an obstacle course.

That spurred the front office of the National Basketball Association’s Portland Trailblazers to hold its annual teambuilding conference at the 118-room resort two years in a row. The group, when not in meetings to discuss the upcoming season, built camaraderie by balancing on an oversized teeter- totter and scaling a 15-foot wall.

“The whole team tried to get over this wall,” said Traci Reandeau, the Trailblazers’ vice president of human resources. “You have to use everybody’s strengths, so it’s not like you could just step on head coach Nate McMillan, who’s pretty tall, to get over it.”

Spending Stifled

Obstacle courses and carpentry classes may not be enough to help corporate travel return to its 2007 peak as the economic slump continues to stifle spending. Revenue per available room at U.S. luxury hotels plunged 24 percent last year, the most of any industry segment, according to Smith Travel.

“A lot of the hotels are cognizant of the idea to not lower rates but instead offer value,” said Christine Lai, executive strategy director for Santa Barbara, California-based Elite Meetings International Inc., which connects hotels with conference planners. “There was definitely the AIG effect.”

Companies have sought to avoid appearances of excess following the 2008 bailout of American International Group Inc., she said. AIG was criticized by lawmakers for rewarding agents with a $440,000 trip to a California resort less than a week after the insurer got its first government bailout. The company canceled about 160 resort events costing a total of $80 million after congressional hearings in October 2008.

‘Still Restraint’

“There is still restraint in corporate spending, although it’s nowhere near where it was six months ago,” said Patrick Scholes, an analyst at FBR Capital Markets in New York. “The problem is corporate meetings are often planned far in advance, so even if the hesitation is lessening, it may still take a year or two until some of these will actually take place.”

For Reandeau of the Trailblazers, the visits to Miraval weren’t only for entertainment. The resort’s activities, which included contests such as chili and barbeque cook-offs, helped with team-building, she said.

“These retreats ensure that there’s a connection there -- that we’re all on the same page,” Reandeau said. “It’s not just fun but, we think, necessary.”

Miraval last year added to its regular corporate offerings a four-day executive program, during which participants receive lessons from Tony Schwartz, a management expert, on boosting energy levels within their companies. The resort charges $3,000 plus tax per person for the program, said Michael Tompkins, general manager of the Arizona resort.

Google, Toyota

The resort has hosted executives from companies including Bank of America Corp., Google Inc., Sony Corp. and Toyota Motor Corp., Tompkins said. Half of the available executive courses have been booked for the remainder of the year, and about 10 percent have been reserved for 2011, he said.

The Sanderling Resort & Spa, in North Carolina’s Outer Banks, will begin offering butchering workshops to its corporate and leisure guests next month, said Laura Millett, a spokeswoman for the hotel. Guests will “meet their meat” as a German master butcher takes them through the process of selecting and cutting meat from steer, hogs, lambs and other animals at a nearby organic farm, the hotel said today in a statement.

At W Hotels, Starwood Hotels & Resorts Worldwide Inc.’s high-end boutique brand, business clients can learn how to cook, knit or be a disc jockey, according to the chain’s website. At Stowe Mountain, where groups can get maple-infused hand and foot massages during business meetings, corporate programs have been successful enough to help spur the 139-room hotel to open an additional 179 rooms in December, Fukumoto said.

Rise in Reservations

Corporate reservations for the year are up 34 percent from 2009, she said. About 30 percent of Stowe Mountain’s bookings are from business groups, with the rest from leisure travelers. The resort is trying to shift the ratio to 50-50, Fukumoto said.

Joie de Vivre Hospitality, a San Francisco-based boutique hotelier with 35 properties, started its “Joy of Meetings” initiative in January 2009, with bubble-blowing sessions to relieve stress and yoga classes “to stimulate endorphins and energy,” according to the company’s website. Guests can also fly kites and make s’mores, the campout dessert made from graham crackers, chocolate and marshmallows.

The program has helped Joie de Vivre boost business this year, Carole Manning-Kim, corporate director of national sales and marketing, said in an e-mail.

At the Broadmoor in Colorado Springs, Colorado, which promises corporate clients a full refund if they aren’t satisfied, groups can participate in fly-fishing and whitewater- rafting excursions. Bookings for 2011 show a 15 percent increase in business-group demand from this year, said John Washko, vice president of sales and marketing.

About 65 percent of visitors at the closely held Broadmoor are corporate clients, he said.

“After what we’ve just come through, we’ve seen the C- level customer looking more and more for something outside of the set standard golf-and-spa event,” Washko said.

Hotels Track You and Your Complaints

The Wall Street Journal

'I Hate My Room,' The Traveler Tweeted. Ka-Boom! An Upgrade!

You might think that the only ones following your online musings are your mom and college pals. But if they include a gripe about a hotel, the front-desk clerk at the offending property may be listening, too.

Hotels and resorts are amassing a growing army of sleuths whose job it is to monitor what is said about them online—and protect the hotels' reputations. These employees search social networking sites like Facebook and Twitter for unhappy guests and address complaints. They write groveling apologies in response to negative reviews on TripAdvisor. And they keep tabs on future guests who post about upcoming stays—and sometimes offer them extra perks or personalized attention at check in.

For travelers, the upshot is that if you use social media, your complaints could have more power. In years past, guests unhappy about a lumpy bed, grimy bathroom or an awful view had to take their frustrations to the front desk or hotel manager and hope for some restitution. Now, with some guests having hundreds—and even thousands—of followers on Twitter and Facebook, complaints can have a big audience. It's like every guest has a virtual megaphone.

If you want to increase the odds that your complaint will be heard, include the full name of the hotel and your real name. Those moves got Paul Horan upgraded from a room with a view of air conditioning ducts to one overlooking the pool at the Orlando World Center Marriott Resort in Florida.

Mr. Horan, a 47-year-old who works in sales at a software company, tweeted, "At the Orlando Marriott World Center for RIM WES 2010 [a technology conference]. But I have the crappiest room in the hotel." Front-desk employee Zachary Long saw Mr. Horan's comments while searching Twitter and went into damage-control mode. Mr. Long had a note of apology for the "current room situation" slipped under Mr. Horan's door and offered to move him to a pool-view room the next day.

"It was on Twitter, so it could spread," Mr. Long says.

"It was a complete shock" that Marriott saw the message and reacted, Mr. Horan says.

Guests that reach out to hotels through social media channels may find themselves getting freebies and better service. Mr. Long, along with his colleague Sarah Pribila, have handed out wine, milk and cookies, and better rooms to guests they know are coming because they interacted with them on Twitter in advance. "No doubt we do go out of our way a little bit for Twitter and Facebook" commenters, says Mr. Long, in part because it's only a small number of people. For now, only about 1% of their guests are active on Twitter, Mr. Long says.

During a recent technology conference at the hotel, an attendee who moderates and edits an influential website about BlackBerry news mused about his desire for a cold beer over Twitter. Already identified by Mr. Long and Ms. Pribila as an active blogger with more than 1,000 Twitter followers, the hotel responded over Twitter, "Can I buy you a beer? Stop by the "actual" Front Desk and ask for Sarah!"

The recipient, 29-year-old Chris Parsons from Halifax, Nova Scotia says, it "kind of took me by surprise. I've never had that kind of customer service—just out of the blue." The hotel bought him a bucket of 10 Coronas to share with friends on the hotel's outdoor patio.

Sometimes using social media to lodge a complaint or request can be more effective than calling the front desk. In March, a guest at the Atlantis, Paradise Island in the Bahamas needed a roll-away bed and some extra towels. It was a "high, high occupancy time for us," and the guest had called around for help to no avail, said Dean Sullivan, vice president of digital marketing at Kerzner International Holdings Limited, which owns and operates hotels including the Atlantis, Paradise Island, a 3,414 room resort. The guest posted about it on the hotel's Facebook page. "We got in touch with the GM [general manager] and handled it within the hour," said Mr. Sullivan.

Savvy hotels are using social media to boost their ratings on TripAdvisor. Earlier this year, front desk employees at the Roger Smith Hotel, a 130-room boutique hotel in midtown Manhattan, started mentioning TripAdvisor to guests checking out. And sometimes employees will send guests a link to TripAdvisor over Twitter or email, encouraging them to leave a review.

Since the beginning of last year, the hotel jumped about 100 places in New York City hotel rankings on the review site, says Brian Simpson, director of social hospitality for the hotel.

Hotels know that many travelers now use the Web—and specifically the reviews, blog posts and other online missives of past guests—to decide where to stay. About 41% of leisure travelers and 50% of business travelers say user reviews influence their travel decisions, according to a survey from comScore Inc., a firm that tracks online traffic, and Google Inc.

At the Orlando World Center Marriott, Mr. Long and Ms. Pribila track what is said about their 2,000-room hotel every day, and often into the night.

One recent afternoon, Mr. Long peered at the computer in his small windowless office and opened up HootSuite, a program that lets users organize the millions of comments passing through Twitter at any given moment. He scanned the lists he has permanently set up on the software: current guests, past guests, people tweeting about Orlando hotels (so he can send notes to try to drum up business.), people tweeting about his specific hotel, and people tweeting about a conference currently at the resort. He checks HootSuite at least once an hour on his iPhone, often glancing at it while roaming the sprawling resort dotted with palm trees.

Via the hotel's @TheFrontDesk account on Twitter, he and Ms. Pribila chat with future, current, and past guests. They answer questions and confront complaints. Then Mr. Long moves on to FourSquare, a website where people can use their mobile device to broadcast their physical location to friends, known as "checking in" at a location. "We monitor these people as well," says the 28-year-old.

Some hotels are hiring outside consultants like StepChange Group, a division of Powered Inc.. The Portland, Ore., company develops social media strategies for companies, and will also help staff watching online commentary and respond. More hotels are employing new services like those offered by Revinate LLC that track online comments and reviews and send out electronic reports for corporate mangers, front-desk staff and even housekeeping to gauge a property's online reputation. Hotels are also increasingly using social media to market their properties, too, by, for example, sending out special discounts via Twitter.

"Our day has sort of gone into a 24-hour cycle because we are constantly monitoring" online comments, says Mr. Sullivan of Kerzner. Mr. Sullivan—who often checks online commentary around midnight before going to bed—helped train what internally is called "the Twitter Army," at the Atlantis, Paradise Island. Staff that had previously showed an interest in social media got tips on what content to post, like updates on the resort's dolphin interaction programs, and some will start monitoring and responding to guests. Headquarters' staff, hotel employees and top executives already monitor the company's Facebook pages and online reviews as part of their jobs, Mr. Sullivan says. The company also hired StepChange last year to work on strategy and fill in gaps, such as monitoring middle-of-the-night missives.

You're unlikely to get into an online brawl with a hotel. Most hotels tend to shy away from back-and-forth public confrontation. Instead, they usually respond to negative comments by apologizing, pointing out recent improvements made at the hotel and asking the guest to contact staff over email or phone to privately solve the problem. The Ritz-Carlton, owned by Marriott International Inc., for example, doesn't allow its properties to respond publicly to TripAdvisor reviews, but does read them and make an effort to track down guests to fix problems, says Allison Sitch, senior corporate director of public relations for Ritz-Carlton.

Of course, to get better service from a hotel using social media, the hotel has to be listening. For now, hotels' approaches to social media vary widely—even among hotels of the same brand. While the Marriott Orlando World Center is very active on Twitter and Facebook, for example, the New York Marriott Downtown doesn't have either up and running.

How to Get Heard at Hotels

With more properties paying attention to social media outlets, here's how to use them to snare better service:

    * Find out how to reach your hotel online. Search Twitter and Facebook to see if it has an account.

    * If there's no account for the individual hotel, search for the company that owns the brand. For a Westin, search for Starwood. For a Courtyard, look for Marriott.

    * Before you check-in: Post a comment on the hotel's Facebook page or send a tweet saying you're looking forward to your stay. A savvy hotel will put you on its radar and may dole out perks or give specialized service.

    * When tweeting a complaint, be specific. Don't say "I hate my hotel," say "I hate X hotel for Y reason."

    * Use the hotel's specific "handle," or Twitter name in your message, like @StarwoodBuzz for a Starwood property

    * Use your real name so a hotel can find you in their reservation system. You can't get your complaint addressed or extra perks if you can't be tracked down.

    * Have a lot of online friends or followers. Hotels will pay more attention to your requests.

    * Don't be unreasonable. If the hotel senses you're a lost cause, it may spend less time trying to fix the problem.

Budget-Conscious Hotels Turn to 'Optional' Housekeeping

USA Today

 

Room cleaned, sir? Want to sleep on your bedsheets a few more days, madam?

More hotels are cutting back on housekeeping services. With their business sharply reduced, hotels are looking to save money by urging customers to forgo daily changing of linens, towels and toiletries.

The trend isn't new, but the urgency is spreading to more chains as the industry battles a historic downturn in travel. Hotels market their new housekeeping approach as a "green" effort, and some analysts and travelers say the spin has merit.

"I have no issues with hotels cutting back," says frequent traveler Mark Hanna, a technology industry executive. "Replacing my linen on a daily basis is the height of absurdity. I don't do it at home, so why do it in my hotel room?"

Best Western asks guests to specify their choice of housekeeping: no service, replace towels/empty trash/quick vacuum, or full clean. Guests can check their choice and specify the cleaning hour on a card hung on the door knob. Since the program began late last year, about 40% of guests chose no or limited cleaning, says Ron Pohl of Best Western.

Some chains operated by Wyndham — Super 8, Howard Johnson, Travelodge, Days Inn and Ramada — are adopting Wyndham Hotels' practice of leaving linens unchanged whenever possible, says Wyndham spokeswoman Evy Apostolatos. Starting next year, all Days Inn hotels will reduce bed linen and towel changes from daily to every third day in occupied rooms.

Omni Hotels began asking customers last year whether they want limited housekeeping, in which bed and bath linens are changed on request or on the third day.

Some hotels give financial incentives. The Marmara Manhattan Hotel in New York offers a $20-a-night discount to customers who go without housekeeping for three days. "The green rate" applies only to those who book at least three nights on its reservation system.

Bjorn Hanson, of New York University, says customers aren't buying the industry's "green" argument but are generally accepting modest cutbacks in housekeeping. "The long-term trend (for companies) is to look for ways to make hotels more affordable and accessible," he says.

Not every traveler likes the trend. Says business traveler James Lawrence Wilson: "If I'm paying for a hotel, then I want clean sheets, clean towels and a clean room every day."

Hotel Wars: the Drama behind the Hospitality Trade

LA Times

 

When Ross Klein arrived at Hilton Worldwide's Beverly Hills headquarters to create a new luxury chain, he was the "it" guy in the hottest segment of the lodging business.

A former retail marketing whiz, Klein had trained his fashion sense on the buttoned-down hotel industry, helping turn the W chain into a hip money-maker for its parent, Starwood Hotels and Resorts Worldwide Inc. Hilton lacked a product to compete. So it lured Klein away from Starwood in 2008 by offering him a chance to build a brand from scratch.

Klein delivered, quickly cooking up Denizen, a funky, sophisticated hotel concept. At a lavish launch party last year in Berlin featuring scantily clad dancers and an opera singer, Hilton Chief Executive Christopher Nassetta hailed Klein as a "creative genius."

But to hear his ex-employer tell it, Klein is a copycat and a thief. Starwood claims he carried off thousands of pages' worth of documents filled with the company's trade secrets and shared them with Hilton management, according to a civil lawsuit it filed last year in U.S. District Court in New York. Now federal prosecutors are looking into filing criminal charges against Klein and others that include conspiracy, computer fraud and theft.

Hilton denies that any senior executives knew about the material and says it is cooperating with the government. The company fired Klein after just 11 months on the job and killed the Denizen brand.

But the legal wrangling exposes a side of the cheery hospitality trade that guests and even hoteliers don't normally see — one rife with claims of corporate espionage, double-dealing and poaching of top performers.

"It's a very small-knit community where people know each other, and this sort of thing just isn't done," said Alan Reay, president of Atlas Hospitality Group.

Industry veterans say the suit is the ugly fallout from a lodging boom a few years ago, when investors were pouring money into expansion and hotel companies were scrambling for talent. Loaded with nearly $21 billion in debt from a leveraged buyout by private equity firm Blackstone Group, Hilton needed to deliver results.

"In my 15 years of practicing law in this area, I have not seen a case at this level," said Todd Sullivan, a lawyer with the firm Womble Carlyle in North Carolina, who specializes in trade secrets. "It's almost like Greek tragedy."

Klein's short Hilton career began soon after Blackstone bought the chain for $26 billion in 2007. The purchase put pressure on Hilton and its new chief executive, Nassetta, to expand beyond its 10 existing brands, which include the Waldorf Astoria and the Conrad Hotels.

Hilton had failed to get into the fast-growing boutique sector. Starwood's first W opened in 1998 in New York, and it quickly attracted stylish, young travelers who were willing to pay top dollar to enjoy the hotel's sultry lounges, individually designed rooms and trendy furnishings. Rooms there currently fetch as much as $750 a night.

Starwood founder Barry Sternlicht is credited for creating the W brand. But Klein, who served as the president of Starwood's luxury brands, became the force behind it after he was hired in 2003 from the fashion house Ralph Lauren. There, as senior vice president for marketing, he had helped pump up sales of Polo jeans and perfumes.

Klein declined a request to be interviewed. But hotel industry veterans say he stood out like a bolt of lightning in the conservative hotel industry with his artistic flair and colorful clothing. At the Berlin launch event he appeared tan and trim, sporting a goatee and a pink tie and vest.

"Ross is a flamboyant character," said Andrew Sangster, editor of Hotel Analyst. "In a very staid industry he looks, shall we say, unusual. And quite refreshing for it, frankly."

W was never the biggest brand — it currently accounts for just 35 of Starwood's 1,000 properties. But the niche is lucrative, and other chains hustled to catch up.

Court documents show that Nassetta began quietly recruiting Klein almost as soon as he took over at Hilton. Meanwhile, Nassetta's deputy pursued Klein's more straight-laced colleague, Amar Lalvani, a California-raised, Harvard-educated MBA who was responsible for overseeing the business side of W's global expansion.

Klein and Lalvani announced their departures from Starwood in May 2008, within a few days of each other.

"It was one of the biggest hiring coups in the industry that anyone remembers," said Mary Gostelow, editor of numerous hotel industry publications.

But Starwood said those defections cost it much more than talent. In his final weeks at Starwood's headquarters in suburban New York, Klein brought in a personal laptop to download company data, according to the lawsuit. He also packed boxes with "brand bibles," internal financial reports, demographic studies — "a veritable mother lode of computer and hard-copy confidential information," the lawsuit said.

The information quickly circulated among top brass at Hilton after Klein's arrival in Beverly Hills, the complaint said. Starwood alleges that 44 executives at the highest levels of Hilton, including Nassetta, read the purloined materials and used them to develop Denizen, knowing full well that they were the intellectual property of a competitor.

According to the lawsuit, one Hilton executive sent Klein an e-mail that said "I am voraciously reading these … W Residential Development Kits"; another advised discretion: "I'm concerned that these are all Starwood documents"; and yet another urged Klein to speed the "Hiltonizing" of documents, seemingly a reference to hiding the origin of the material so it could be shared with "the Exec Group ASAP."

Lalvani funneled confidential information to Hilton while he was still employed at Starwood, according to the complaint, including plans for a new W in Thailand. "Let's discuss protocol during my transition on deals like this so we don't miss them," Lalvani said in an e-mail quoted in the lawsuit. "This is going to be fun."

Klein and Lalvani also lured some of their old colleagues from Starwood to Hilton, and Lalvani sent an e-mail to one of the defectors asking him to bring along more Starwood documents, the complaint said.

A Hilton vice president blew the whistle in November 2008. In an e-mail cited in the lawsuit, the employee wrote that Klein had "put some of these highly proprietary documents on Hilton's internal computer server, and instructed Hilton personnel to use these proprietary Starwood documents as a detailed plan for them to follow."

Around the same time, Starwood attorneys sent a letter to Hilton requesting records related to the spate of employee defections. Hilton launched an internal investigation.

Still, work on Denizen proceeded apace. At the March event in Berlin, there were few signs of any trouble. Nassetta publicly praised the men.

"Our team has worked literally tirelessly, led by Ross Klein, the creative genius behind this fabulous brand, and Amar Lalvani, who has been running around the world," Nassetta said before announcing the Denizen name.

Barely a month later, Starwood filed its complaint in federal court. Hilton denied wrongdoing and vowed to press ahead with Denizen. But days later it agreed to scuttle its plans for the new chain. It also fired Klein, Lalvani and several other former Starwood employees.

Starwood has not let up. The first complaint accused only Klein and Lalvani of wrongdoing; a second, filed early this year, expanded its allegations to include dozens of Hilton executives including Nassetta and his corporate secretary and general counsel Richard Lucas. Starwood has asked that Hilton pay unspecified damages and that it be kept out of the W's lifestyle and luxury sector.

Hilton attorney Aaron Marks said that Hilton warned Klein and Lalvani against bringing any proprietary Starwood materials with them.

"There's absolutely no evidence that anyone at Hilton encouraged, condoned or knew about former Starwood employees' bringing over confidential materials belonging to Starwood before it happened," Marks said. "From Hilton's perspective, these guys shouldn't have brought with them any of it."

The U.S. attorney in Manhattan has empanelled a grand jury to consider whether the actions of the Starwood defectors were criminal. This February, the prosecutors filed a motion with the judge overseeing the civil lawsuit filed by Starwood, asking for that case to be put on hold while the criminal prosecutors finish their probe into potential fraud, theft of trade secrets and conspiracy.

Klein still lives in Los Angeles. LinkedIn, a professional networking site, lists him as an independent marketing and advertising professional. The same site indicates that Lalvani has moved back to New York and founded One Day Partners, a travel consultancy.

A lawyer for Klein, Ronald Nessim, said: "This case is much more nuanced than Starwood's exaggerated and misleading complaint suggests."

A lawyer for Lalvani, Christopher Morvillo, said: "Starwood's complaint strings together half-truths, inaccuracies and hyperbole into a colorful but ultimately misleading story. Amar acted at all times consistently with his stellar reputation in the industry and looks forward to the truth coming out."

Hilton moved its headquarters from California to a suburb of Washington, D.C., last year, adopted a new logo and hired a new executive to explore the boutique sector. In the meantime, the privately held company has struggled under its debt load; it recently negotiated a $4-billion reduction with its lenders.

Like other hotel firms, Starwood has felt the economic slowdown. But the W chain has continued to expand. In January the newest W opened in Hollywood, and five more openings are planned for this year in places as far-flung as St. Petersburg and Bali. The parent company's share prices have been rising over the last year.

Industry insiders said the brief glimpses of Denizen left many with the belief that W might have had a worthy competitor.

"It was genuinely quite different," said Sangster. "How effective it would have been, no one will ever know."

Moody's Raises Lodging, Cruise Sector Outlooks

Associated Press

Moody's Investors Service raised its outlook for the lodging and cruise sectors on Monday, citing more stable credit conditions.

Hotels and cruise lines have struggled during the recession as consumers cut back drastically on nonessential spending.

That trend, Moody's said, appears to be easing.

Moody's lifted its outlook for the sectors to stable from negative. The ratings agency anticipates fundamental credit conditions will be "generally stable" over the next year to 18 months.

Marriott International Inc. reported earlier this year that it had returned a fourth-quarter profit, but that even with more people staying at hotels, room rates have lagged. Its shares fell 49 cents to $33.39 in afternoon trading, while shares of Starwood Hotels & Resorts Worldwide Inc. shed 96 cents to $47.33.

Carnival Cruises Corp., the cruise operator, said last month that profits fell 33 percent, partly due to surging fuel costs, but that revenue climbed 8 percent. And the prices passengers paid for their cruise vacations climbed 17 percent.

Shares of Carnival dropped 55 cents to $38.42 and shares of Royal Caribbean Cruises Ltd. slipped $1.01 to $33.52.

Meeting Planners Cut Back on Conventions at Pricey Hotels

USA Today

 

Meeting planner Ronni Epstein is giving her cost-saving effort the old college try.

Epstein, regional director of development for Crohn's & Colitis Foundation of America, has a slashed budget this year. So returning to the Millennium Biltmore Hotel in downtown Los Angeles for the foundation's annual convention would be out of the question. Instead, she's going to an unlikely venue: University of California-Los Angeles.

UCLA leases its conference center to groups looking for places to meet and at the right price for Epstein — about half what she spent last year.

"I'm surprised we didn't think of it sooner," she says. "I went to college, too, and I don't remember the school having conferences."

University campuses, such as UCLA and the University of Maryland, do host conferences. And they're increasingly appealing places for businesses, associations and other groups to have conventions as meeting planners face tight budgets and low attendance during the economic slump. They're less expensive than the fancy hotels, resorts, big convention halls and exotic locales they met in before the recession.

And they're less controversial. Companies have been taken to task for extravagence during hard times. Insurance giant AIG, for example, caught grief from Congress for having a luxurious incentive meeting at a St. Regis hotel in Southern California in 2008 after being bailed out by taxpayers.

So planners like Epstein are working overtime to find increasingly creative ways to slash costs.

"After AIG and what Congress said, meeting planners, if they still have a job, are charged with saving as much as they can," says meetings consultant Joan Eisenstodt. "There is no organization not trying to save money on meetings."

The changes could have lasting effects on the conventions and meetings business if groups decide they can stick to lower-cost affairs when the economy rebounds.

"I don't think we're going to go back to what we've had in the past in the next four or five years — or ever," Eisenstodt says. "There's the pressure to save. We're using more virtual access than ever. And airline cutbacks are making it harder and harder to get there. But in order to have a good meeting, you have to spend an appropriate amount of money. If we cut everything that makes it good, why bother going?"

Some of the changes meeting planners are making are obvious: shorter conventions, going to less-expensive cities or choosing suburban locations rather than higher-priced downtown venues. Others are more subtle but can save thousands of dollars: fewer coffee breaks to save on catering costs, minimal stage sets, even eliminating bottled water.

The cutbacks are having an effect on the travel industry. Companies, associations and non-profit groups' spending on meetings, conferences and trade shows constitutes about 12% of total travel spending. And last year, spending fell by 15% to $85 billion compared with 2008, according to the U.S. Travel Association.

And it hasn't come back. A survey by Meeting Professionals International of its members last fall indicated members would spend about 3.5% less per meeting this year than last. That's on top of a 6% drop in spending last year compared with 2008, members estimated.

Larry Luteran, Hilton Hotels' senior vice president of group sales, says the recession's impact on group meetings is more pronounced than in previous down cycles.

"This has been very unique," he says. "In this downturn, everything has been scrutinized. You need to sell the meeting before (it takes place). You need to have good business reasons."

The belt-tightening has prompted changes, such as:

•Taking advantage of cheaper travel and meeting dates. AARP, for instance, moved an educational conference to the week before Thanksgiving because hotel room rates were 50% cheaper than the dates it originally wanted in late October.

•Shortening stays and cramming in more tightly focused sessions. Terri Ribble, a meeting planner in the Dallas area, says she shortened a recent client event, a gathering of natural gas industry professionals, from three days to a day and a half by lengthening the session days, jamming in more content; and placing some social events such as golf tournaments at the end of the program

•Consolidating events. Goodwill Industries is lumping two events that would normally be separate — a board meeting and a lobbying conference — into its annual member training program in late April. Instead of rotating the meetings into other parts of the country as it has in the past, it'll take place in Washington, near its corporate headquarters. That eliminates travel by headquarters employees, says Sekeno Aldred, a learning events specialist at Goodwill.

More aggressive planning

Planners are more aggressive in striking bargains with hotels.

They're insisting on lower penalty fees for last-minute cancellations and refusing to place a deposit or insisting that any deposit be placed in an interest-bearing account. They're also giving hotels more conservative estimates of reserved-room blocks.

For its 2009 convention, the National Association of Free Will Baptists in Tennessee paid Hilton Cincinnati $12,000 in penalties because it couldn't fill 90% of the rooms it promised to occupy due to last-minute cancellations. Consider it a lesson learned, says Keith Burden, who heads the organization. He says he'll no longer sign a contract with a 90% "attrition rate." For its convention this year, he negotiated 80%.

When World Stem Cell Summit was considering Detroit for its 2010 annual meeting, Marriott Renaissance offered to pick up airport transportation for some top officials. The group declined the offer and had the hotel agree to apply a discount to the master account, says Charles Massey, whose firm, Synaxis Meetings & Events, organized the event.

It never hurts to ask for freebies, says CB Wismar, director of events for AARP. For its convention this year in Orlando, AARP negotiated free Wi-Fi and use of health clubs at some hotels.

Planners also aren't afraid to cut hotel costs by going to outside suppliers for convention supplies, equipment and staff.

As Leslie Zeck, director of meetings for the American Council of Engineering Companies, was preparing for its annual convention later this month, she was approached by an audiovisual company that was setting up lights, stage sets and projectors for the convention preceding hers at the Grand Hyatt Washington. The company proposed to keep the equipment at the hotel ballroom so that Zeck could save on installation and loading fees.

Zeck's convention budget has been sliced 10% this year, and taking up the company's offer saved her about $10,000.

"We're getting more equipment than what we'd have purchased on our own," Zeck says.

In the past, Goodwill typically relied on hotels for its audiovisual equipment. But it took the business to outside vendors for the first time this year. It's saving the organization about 30%. "We're now seeking competitive bids whenever possible," Aldred says.

Some planners bypass full-service hotels altogether.

Colorado-based Unique Venues, which matches meeting planners with non-traditional meeting venues, has seen the number of leads grow 30% in the last year, says President Chuck Salem.

In addition to university campuses and suburban conference centers, even camps and cruise ships are generally more affordable than full-service hotels in city centers, Salem says.

An overnight meeting at UCLA, for example, can start at about $135 a person, including a meeting room with audiovisual equipment and three meals, he says. And it's not dorm cafeteria food.

"They have sushi, Thai and Italian," he says. "And you don't have to wear flip-flops to go to the bathroom."

Lisa Block of the Society for Human Resource Management says she has scheduled 40 seminars this year in conference centers, most of which were at hotels in previous years. Another bonus: Conference centers don't charge attrition penalties, she says. "We're watching our pennies but trying to be careful not to impact quality and experience."

Obvious penny pinching

For conventiongoers, the penny pinching probably is most noticeable in exhibit halls and seminar sessions.

They're seeing fewer celebrity speakers. Buffet-style dining is replacing plated lunches and cocktail receptions. And there are fewer handouts, brochures and goodies — almost anything to save a buck.

For her annual convention this year, Block has eliminated some direct mail sent to 250,000 society members. They now get more "bite-size" e-mails. Handout material for the convention — such as the attendee list and speaker handouts — will be posted online for members to view and, if they want, print at home.

The Pacific Coast Reproductive Society has asked its convention hotel to eliminate bottled water — which can cost as much as $5 a bottle — and install water jugs in meeting rooms. It also distributed reusable plastic water bottles instead of paper cups and saved "thousands of dollars," says Massey of Synaxis Meetings, which planned the event. The non-profit organization also replaced convention tote bags with cotton bags that can be used at grocery stores, and cut down on trade show displays.

More organizations are also refusing to hire expensive speakers. AARP had considered several marketing "industry celebrities" for its meeting in Los Angeles in November but found hiring university professors who specialize in AARP-demographics is about 75% cheaper. The Society for Human Resource Management's annual convention will have 180 concurrent sessions with about 200 speakers, about 15% fewer than 2009.

Those attending the American Council of Engineering Companies' convention will have to settle for breakfast sandwiches and burritos, instead of a full breakfast from the hotel's menu.

"If times were great, we'd have given them a full hot breakfast buffet," says Zeck of the American Council of Engineering Companies.

At the World Stem Cell Summit in Detroit in October, attendees will get box lunches — minus the pasta salad.

"It was just a couple of bucks," says Massey of Synaxis Meetings. "But multiply that by 1,200."

Hard Times Send Hotel Industry into Survival Mode

USA Today

Neil Cornelssen says he misses the free cookies in the evening at one hotel and the daily newspaper outside his door at others.

He's also noticing that bath towels in a growing number of hotel rooms are shabby and need to be replaced.

Cornelssen, a sales manager in Marlton, N.J., is one of many frequent travelers who say they see the tangible effect that the recession has had on the nation's hotel industry. Among them: run-down rooms with fewer bathroom amenities, closed club lounges, fewer concierge staffers, slow room service, reduced hours at restaurants and bars, and infrequent airport shuttles.

"The unfortunate reality of today's marketplace," says Hotels magazine Editor-in-Chief Jeff Weinstein, is hotels are "more focused on saving cash than delivering the best service."

Hit by a declining demand for rooms, low room rates and plummeting revenue, hotel companies have laid off hundreds of thousands of employees and are struggling to maintain quality. A record number of hotels are defaulting on mortgage payments. Hundreds have been taken over in foreclosures, and some have closed or are about to.

"Because of the recession and the credit bust," says Ed Watkins, editor of the trade publication Lodging Hospitality, "it's the worst downturn in decades — perhaps ever."

As a result, says Robert Habeeb, president of Chicago's First Hospitality Group, which operates 40 hotels in eight states, "The industry is in survival mode."

The toll on the industry is told by startling numbers:

•In January, U.S. hotels had a record-low 45.1% occupancy rate — the lowest January rate since industry statistician Smith Travel Research began tracking data in 1987. Last year's rate — 54.8% — was the lowest ever recorded by the company.

•About 400,000 U.S. hotel employees were laid off during the past two years, says Joe McInerney, president of the American Hotel & Lodging Association. About 1.6 million hotel and motel employees remain, according to the most recent Bureau of Labor Statistics data.

•New hotel construction has declined significantly, reducing hotel companies' opportunities to grow their brands and increase revenue, says Mark Woodworth, president of Atlanta-based PKF Hospitality Research. Construction began on 78 new hotels in last year's fourth quarter, compared with 158 during the same months in 2007, according to Smith Travel Research.

•The total property value of U.S. hotels has fallen by up to 50% from its peak in 2007, according to Fitch Ratings, which provides ratings and analytical commentary to the world's credit markets. Such a drop has limited the ability of owners to sell hotels and improve their credit profiles, Fitch Ratings says.

•A record 15.7% of securitized hotel mortgage loans were delinquent at the end of last month, according to Trepp, which tracks commercial real estate loans. Securitized loans represent about a quarter of hotel loans.

In California alone, 330 of the state's 10,000 hotels have defaulted on mortgage payments since the start of 2009, says Alan Reay, president of Atlas Hospitality Group, a research and marketing company in Irvine, Calif.

Reay says 76 hotels in California and about 500 nationally have been taken over by lenders in foreclosure since the beginning of 2008. Most have continued to stay open for business.

"Banks don't want to take back the keys to distressed hotels in most situations," says Paul Heney of the trade publication Hotel & Motel Management. "They seem to be doing everything they can to negotiate with the ownership groups — to ride out the rest of this economic stress."

Closing a hotel is a huge risk, Heney says. Some believe "that the day a hotel closes its doors, it is worth 50% of what it was worth the day before," he says.

Some high-profile closures

Upscale hotels have been hit hardest, and some have closed.

The W Hotel in San Diego was turned over to lenders in September after its owner, Sunstone Hotel Investors, defaulted on a $65 million loan payment.

The Wyndham Drake in Oak Brook, Ill., closed a month later.

The Drake had "about $3 to $5 million in deferred maintenance when it was shut down," says Ted Mandigo, a hospitality consultant in Elmhurst, Ill. "It was struggling for occupancy and at a negative cash flow."

On May 2, The Ritz-Carlton, Lake Las Vegas, in Henderson, Nev., will close because of a decline in business, says Vivian Deuschl, the chain's vice president.

Meetings business decreased at many luxury hotels, Deuschl says, after Congress scolded insurance giant American International Group for spending about $400,000 at a luxury California resort following an $85 billion federal bailout in 2008.

Budget and non-luxury hotels haven't escaped the downturn.

Sunstone, which owns various Marriott, Hyatt, Hilton, Fairmont and Starwood hotels, has turned over 13 other hotels to lenders. They include the Renaissance Westchester in West Harrison, N.Y., the Marriott Ontario Airport in Ontario, Calif., the Hilton Long Island/Huntington in Melville, N.Y., and the Holiday Inn Downtown in San Diego.

Citing decreased business-travel spending, Extended Stay last June filed for bankruptcy court protection with a debt of $7.6 billion. Its 684 hotels, which cater primarily to guests staying at least 18 nights, remain open. The company has five hotel brands: Extended Stay America, Extended Stay Deluxe, Homestead Studio Suites Hotels, StudioPLUS Deluxe Studios and Crossland Economy Studios.

Despite the industry's deep financial woes, William Marks, managing director for San Francisco-based JMP Securities, says he doesn't believe the industry has been permanently altered.

"We are just experiencing the cyclical nature of the industry," he says. "Unfortunately, this is a more powerful downturn than normal."

More cuts, fewer upgrades

To cut costs, hotel employees now perform a variety of tasks, says Roberta Nedry of Hospitality Excellence, which provides service training for hotel employees. Some brands have replaced experienced concierges with lower-paid, inexperienced ones.

Hotels also have become more vigilant about turning off lights and lowering thermostats, and are closing wings or floors when occupancy is down, First Hospitality's Habeeb says.

Renovation and upgrades are being delayed, says Heney of Hotel & Motel Management.

"Many hotels just can't go through with upgrades, say to flat-screen TVs in guestrooms, as soon as they'd hoped," he says. "A room may not see new furniture but instead get new bedding, lighting and the like."

Hotels' food-and-beverage operations have also had to adjust.

Noticing a drop in corporate travel and spending, two San Antonio hotels — the Omni La Mansión del Rio and the Watermark Hotel & Spa — increased advertising to local residents.

"We were able to draw on new business that at one time may have been overlooked by our properties," says John Brand, the hotels' executive chef.

Managers at the Barona Resort & Casino in Lakeside, Calif., began noticing two years ago that guests were spending less on food and beverages, and dining more at the resort's less expensive restaurants.

Guests began sharing appetizers, skipping appetizers and dessert and ordering a glass instead of a bottle of wine, says Duncan Firth, a chef and restaurant manager at the resort.

In response, the resort instituted discount menus and half-price entrees for some gamblers. This month, one of the resort's restaurants is offering a $9.99 prime rib dinner and bringing back a 10-year-old menu "with prices to match," Firth says.

The opposite may be occurring at some revenue-starved hotels.

Kansas-based business traveler Robert Bender, chief architect for a technology company, says he's seen a big increase in food and beverage prices at hotels.

For guests: Low rates

In January, the average daily room rate in U.S. hotels was $93.93, a drop from $106.54 in January 2008 and the lowest for the month since 2005, according to Smith Travel Research. Similarly, the average room rate for all of 2009 — $97.68 — was the lowest since 2005.

Though the travel industry expects the number of travelers to increase this year, hotel experts don't foresee rates rising quickly.

"Despite early signs of a recovery toward the end of last year, few properties expect to raise prices," says Scott Booker, vice president of Hotels.com. "This could be another year of significant values for both business and leisure travelers worldwide."

Hotels "took a beating" during last year's fourth quarter from corporations demanding rock-bottom room and meeting rates for employees, says Jeff Higley of HotelNewsNow.com, an online trade publication.

McInerney, the president of the hotel trade group, acknowledges the difficulties negotiating in a buyer's market. But he says the country is slowly coming out of recession, and he sees "a little light at the end of the tunnel."

Executives of big hotel companies also see positive signs.

Though Marriott International had a 38% revenue decline and a $346 million loss for 2009, CEO J.W. Marriott last month said the fourth quarter's $106 million profit "exceeded our expectations" and returned the company to profitability.

Marriott said leisure travelers responded to "aggressive marketing campaigns," and business travel "showed signs of improvement." The company opened 38,000 rooms, trotted out two new brands, Edition and the Autograph Collection, and reduced debt by nearly $800 million in 2009, he said.

Matt Avril, hotel group president of Starwood Hotels & Resorts, says his company cut its debt by more than $1 billion and opened 83 hotels last year. Starwood has nine brands, including Sheraton, Westin and W Hotels.

Avril says the company, which lost $107 million in the fourth quarter, has seen a rebound in leisure and business travel, and has emerged from the recession "a battle-tested and more mature organization."

Watkins of Lodging Hospitality says that unlike the economic downturn in the late 1980s, when the industry operated at a loss, it's expected to turn a profit this year and in 2011.

That's possible, Watkins says, because the industry today is more disciplined, "dominated by large companies and savvy entrepreneurs" who are "more sophisticated in marketing and operational techniques."

"Times are tough," he says, "but many hotel owners are measuring that by the fact they can only order a new Mercedes every other year instead of every year."

Wall Street's Time-Share Bungle-Low
Story from the Wall Street Journal

On Tuesday morning, time-share salesman Albert Mora was waiting to meet potential buyers of a Tahiti Village time-share for a tour of the Las Vegas property when a fellow employee got a cryptic call from headquarters to turn away all buyers.

Staff members scurried down the stairs with bundles of cash to return deposits of those being given tours. Later in the day, Mr. Mora learned that Tahiti Village's owner, Consolidated Resorts Inc., which is owned by a Goldman Sachs Group Inc. real-estate fund, was filing for bankruptcy-court protection.

Managers of the fund, part of Goldman's Whitehall real-estate private-equity franchise, had decided to walk away from the $372 million investment, two years after the deal closed.

The chaotic fall of time-share developer Consolidated is the latest example of how Wall Street's foray into the lodging industry is turning out to be a big bust.

Just a few years ago, investors were paying top dollar to acquire hospitality companies on the assumption that demand for time-shares, room rates and travel budgets would continue to rise for the foreseeable future. After all, they reasoned, the industry rebounded quickly after the terrorist attacks on Sept. 11, 2001.

In a prepared statement Tuesday, Consolidated said it planned to file for bankruptcy protection because of a lending environment that "has made it impossible to continue this company."

The country's biggest time-share developers also have seen their business sputter. At Wyndham Worldwide Corp., the biggest time-share developer in the U.S., "vacation ownership" sales plunged to $280 million in the first quarter of 2009, down 39% from a year earlier. Marriott International Inc. reported a first-quarter operating loss of $17 million in its time-share business.

Now, travel budgets are being slashed and room rates are falling, leaving some hotels without enough cash flow to cover their expenses. In the first five months of this year, U.S. hotel occupancy declined to 53%, the lowest total since Smith Travel Research began tracking the figures in 1987. Revenue per available room, on average, has declined to $52.78 so far this year, the lowest tally since 2004.

While all types of hotels are struggling in this recession -- from luxury to budget, from big to small -- the most imperiled are hotel chains that own lots of real estate and were purchased at the top of the market from 2005 to 2008, with substantial debt.

Twenty of the largest hotel buyouts completed between 2005 and 2008 amounted cumulative debt and equity payments of more than $60 billion. Among them: Blackstone Group LP's $26 billion purchase of Hilton Hotels, Lightstone Group's $8 billion purchase of Extended Stay Hotels and the $2.2 billion purchase of Equity Inns Inc. by Goldman's Whitehall.

While not all of those deals are in danger of collapsing, many are troubled. "If you bought a hotel in 2007 and leveraged it to 80% or greater, you just have a huge challenge on your hands," said Bruce Ford, senior vice president of Lodging Econometrics, a hotel-industry research company.

In turn, defaults on hotel loans have risen sharply. Defaults of securitized mortgages -- mortgages chopped up and sold to investors as bonds -- with hotels pledged as collateral likely will rise from the current 4.7% rate to exceed 8% by year end, according to Morgan Stanley.

Already this year, Extended Stay filed for bankruptcy June 15; Red Roof Inn Inc. defaulted on $367 million of securitized mortgages this month, and Whitehall told investors in March it might need a cash infusion or to sell assets to pare Equity Inns' debt.

Monty Bennett, chief executive of Ashford Hospitality Trust Inc., a real-estate investment trust that owns hotels, waded into the deal frenzy when Ashford bought 51 hotels as part of the break-up of fellow REIT CNL Hotels & Resorts Inc. in 2007. While the $2.4 billion Ashford paid was hefty, it was less on a comparative basis than buyers paid in many other hotel buyouts at the time, Mr. Bennett said.

Ashford protected itself from high interest costs on the debt it used to buy the CNL hotels by replacing it with a floating-rate debt. Ashford also sold new shares to raise money to pay down the debt it incurred in the deal. Still, Ashford's stock is down 54% in the past year, though it has fared better than the stocks of other hotel REITs.