Management

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

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

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

“We must live with the consequences of our rate strategies for a long time because when the market turns, and it will, those who sold value will win... Gaining market share and differentiating yourself from your peers is paramount to winning in the long run.”

By Robert A. Rauch, CHA

Economic uncertainty, slowing travel demand, shorter length of stays, shorter booking window, increased distribution channels, shift in buying behavior, low average rates, new supply; take a deep breath…it’s not so bad. That’s right. We have hit bottom.  And while we may stay at the bottom for awhile, it will not get worse. The housing market is showing signs that it may have hit bottom and the Dow Jones Industrial average is back up to October, 2008 levels. The biggest challenge that we need to overcome is that revenues, profits and values have been “reset.”

Read More About We Have Hit Bottom

Ann Marie Kimble, General Manager of the Homewood Suites, San Diego/ Del Mar, was recently named the 2008 Outstanding General Manager of the Year in a medium Sized property. The CH&LA Stars of the Industry Awards recognized Kimble for her excellent leadership and management skills, personalized service, warmth, and customer and staff loyalty.

Kimble is the “go to” person in our organization. She has been at the forefront for getting this hotel nominated and awarded virtually every possible contest that Hilton Corporation has to offer. The Homewood Suites San Diego/Del Mar has a “Spirit of Pride Winner” (Chris Campbell) as well as “2007 Engineering Team of the Year.” It has also been awarded the “2007 Merit Award Winner.” Moreover, her hotel has been in the top 14 of all Homewood Suites by Hilton hotels in SALT scores (customer loyalty). In her career she has received numerous “Outstandings” on Quality Assurance Inspections, the most recent scoring a 97.5% (July 2008).
Read More About Homewood Suites’s Ann Marie Kimble Awarded General Manager of the Year

The Daily Transcript
Friday, March 20, 2009

By THOR KAMBAN BIBERMAN

Hotel construction in San Diego is “zero” for the next three years, said Robert Rauch, hotel consultant, developer and owner.

He doesn’t expect any full-service hotels more than 200 rooms that aren’t already under way, if there are, to even start construction in the county prior to 2012. “I’m talking zero,” Rauch said.

Not only is there no financing, Rauch said he couldn’t think of a hotel currently under construction in San Diego County.

Rauch, who owns a Hilton Garden Inn and a Homewood Suites in the Sorrento Mesa area, has been a hotel consultant for decades.

The newly completed 1,200-room Hilton next to the Convention Center is the most recent major addition, but nothing of that magnitude is planned until hotels at Lane Field and Pacific Gateway as part of the Broadway Complex come out of the ground in the North Embarcadero area.
Read More About Hotel construction in county to remain dry until 2012

“2009 is expected to be a buyer’s market now that the softening economy has created far more price sensitive travelers.”

Despite a fairly strong first half of the year which included economic growth of 3.5% in the second quarter, the third quarter of 2008 “was less robust,” according to Business Week. Weak consumer confidence, a rising unemployment rate and inflationary pressures punctuated by a major rise in the price of fuel cut into demand for U.S. hotel rooms in the third quarter of 2008. Income growth from wages has slowed as businesses feel the pressure from the weak economy.

According to PKF Hospitality Research, hotel room supply in the U.S. rose 2.5% in 2008 and will climb 2.7% in 2009. While economic uncertainty, slowing travel demand, shorter length of stays and a shorter booking window make the job of a hotelier more difficult, this is not doom and gloom.

Read More About Lodging Forecast 2009