February, 2010

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.
Read More About Naked in 2010: Football Play Gives Game Plan to Hoteliers

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.
Read More About Creating a Business Plan for 2010

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.
Read More About Tips for Travelers Wanting to Stay Healthy

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.
Read More About Mezzanine Funding – An Option

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:
Read More About The Hotel Industry Recovery: A Primer

Five strategical points that will lead to success: location, product, management, marketing and financial structure.

There are over 450 hotels in San Diego County, representing over 57,000 rooms and suites. Chains and institutions own most of the larger hotels, but small business operators own many. It takes an entrepreneurial spirit as well as a willingness to take financial risk to be successful in this game. After all, hotel performance has ups and downs. The capital markets virtually walk away from the hotel market when times are tough…and tough is an understatement today.

This year, at each lodging conference, analysts talk about the commoditization of the industry due to the transparency of rapidly declining rates, difficulty in obtaining any kind of financing and the inability to determine where the bottom of this cycle is. Generally, the conversations have turned rather pessimistic for the short term. Hence, is it a good time to get in the game? My typically contrarian answer is yes. San Diego’s lodging industry is resilient and growing, and with the proper ingredients, success is very possible.

Today, the supporting team is more important than ever before. The pace of change in technology alone keeps most entrepreneurs close to a technology advisor. Further, investors, partners and lenders are often required and these individuals can make or break a business plan. The quality of and relationship with key employees and team members is paramount to the success of a hotel. One entrepreneur cannot optimize revenues and expenses, go out and make sales calls and handle the financial end of the business.

Read More About Entrepreneurial Success in Today’s Ridiculously Ugly Hotel Environment

Families, especially families with more than two children, need not surrender their Summer (or any season for that matter) vacation to the current effects of the recession.  Deals, diversion, and destinations are calling families of all sizes to San Diego.

Why San Diego?  “America’s Finest City” has often been voted the number one destination in the world for it’s attractions, arts, beaches, climate, gaming (including the Del Mar Racetrack), sports, restaurants, retail shops, wineries and more.  San Diego offers a phenomenal year-round experience.  San Diegans’ fun, friendly, yet laid back attitudes welcome visitors.  The Hilton Garden Inn and The Homewood Suites, San Diego/ Del Mar, especially aim to provide families with a fantastic and valuable visit to San Diego.

The Homewood Suites by Hilton, Del Mar wants to be your, “home away from home.” To that end, families and guests will receive an all inclusive stay in a suite that includes a kitchen and two TVs in the suite, free breakfast, free internet, and free dinner Monday through Thursday.  The Hilton Garden Inn, San Diego/ Del Mar is founded upon the five pillars of deep sleep, eat well, stay fit, work smart, and treat yourself.
Read More About Found: Affordable Family Vacations at San Diego’s Hilton Garden Inn

First, Hilton Garden Inn (HGI) was ranked number one again by J.D. Powers (2009) for midscale full-service hotels.

Second, San Diego has often been voted the number one destination in the world and here is why: attractions, arts, beaches, climate, gaming including the Del Mar Racetrack, sports, restaurants, retail shops, wineries and more. San Diego is built for a phenomenal year around experience.

Read More About Why Hilton Garden Inn and San Diego?