Interactive online specials, special events, amazing and genuine customer service, leadership required to weather the storm.

Naked bootleg is a term used in football whereby the quarterback runs counter to his blockers and tries to create a run or pass opportunity with no help from his blockers. Well, we are operating our hotels naked but not by choice. We have no “wind at our backs” from a strong economy and no “compression” from other areas such as conventions or events. No, we must build our hotel businesses from scratch during these times.

Management today must include creative leadership that stresses the urgency to work as a team and find ways to entice corporate travelers and groups to our hotels. Gone are the days when we just responded to leads from our brands and convention bureaus. Also gone are the days when we posted our “vacancy” signs outside the hotel and guests would just check in…yes, I was around in the 1970s when that is all that was necessary to fill a limited service or mid-market hotel.

Today, we need to be developing revenue sources in a whole new ballgame. Consumers are vigilant at finding the absolute best value out there. They shop multiple web sites and rely on social media to get input from friends or those who think alike. That means that we as operators must know what key words to use to get potential guests to find our own web sites and we must proactively utilize social media to market our products. This medium includes but is certainly not limited to Trip Advisor, Twitter, Facebook and Linked-In.
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The budgeting process for 2010 has been very difficult but we have the answers.  PKF Consulting just came out with a forecast saying that nine straight quarters of declining lodging demand will come to an end in the second quarter of 2010. They are forecasting continued erosion of average rates.

Most investors expect continued declines in revenues and net income and that will result in lower asset values. While all of this is bad news, I am very bullish on the long-term prosperity of the lodging sector, especially in San Diego. In this article, I will provide insights into San Diego’s current, and near term financial performance based on a wide variety of factors.
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By Robert A. Rauch, CHA, General Manager, Hilton Garden Inn, San Diego/Del Mar

Staying healthy is difficult while traveling. All those germs on the plane, hard to stretch out in those seats, then it is running through airports, finding cars and hotels and getting comfortable in your home away from home. If you stay with us, we have a spa, “Stay Fit” kits delivered to your room, a general manager (me) who runs with his guests on request and also provides personal training sessions for those who want a workout, desire to lose weight or both. I’m also happy to have a healthy breakfast with my guests.
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Mezzanine finance is that part of the capital structure between bank debt and equity. It has emerged as an enticing and in many cases “only” new finance option for hotel owners or buyers increasingly faced with a credit squeeze from banks. Market conditions have created an increasingly favorable climate for mezzanine debt financing, elevating it to critical component status.

This stems from the fact that Wall Street has a severely reduced appetite for large securitized, individual asset loans as well as development loans with inexperienced borrowers. Banks currently understand the local markets better and offer the best terms in many markets if they are still lending; however, they are not offering much leverage. This creates an opportunity for a “mezzanine debt fund.”

U.S. hospitality markets have begun to hit the bottom of the cycle and we are now in a period of slow growth. Banks have not yet assumed that an upturn is imminent. These banks will, however, eventually loan money again with tougher terms and conditions and increased spreads on existing or refinanced facilities when they do believe the cycle is coming back. Hoteliers will have the option of looking at new funding sources, including mezzanine finance.
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During periods of economic recession, there is typically a shifting of market share from traditional channels to discount channels. In 2008, brand sites had 73 percent share of the market. According to TravelClick, it is 70 percent in 2009. Another sign that we are in the economic doldrums is when corporate bookings disappear and the consumer leads the market. Weekends are up in 23 of the top 25 markets according to Smith Travel Research (STR) – considering that each of those top 25 markets is down in revenues year over year, corporate bookings have got to be lagging badly.

RRC Associates states that leisure trips are not impacted like corporate bookings. While that is heartening, those of us who are full with leisure travelers know that they are not paying for rooms without negotiating aggressively for the very best deal they can get. To date this year, REVPAR (revenue per available room) is down 21 percent in those top 25 U.S. markets. In San Diego, it is down 25 percent according to STR. The RRC Associates study indicated 32 percent feel that the business travel recovery will be in 2011, ahead of 19 percent who say it will be in Q3 of 2010, 19% Q4 2010, 13% 2012, 17% beyond 2012 and there is a major shift or “trading down” of accommodations from luxury to upscale and upscale to mid-scale.

Big negative changes in average daily rate have fueled big drops in net operating income. This has already had a massive impact on the ability or lack thereof to refinance. One of the following scenarios will actualize in 2010:
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