USA Today reports ‘Hard Times Send Hotel Industry into Survival Mode’

A really good article from USA Today about hotel’s struggling to survive.  Check out the full article on USA Today’s website. 

The article features some high profile hotel closures such as the W Hotel in San Diego and the Ritz-Carlton in Las Vegas.  The article also mentions how 76 California hotels have already fallen into foreclosure and that 330 out of the states 10,000 hotels have defaulted on their mortgage payments in the last year. 

As far as the cuts, the article really only mentions that Concierges are being replaced by lower cost employees and some hotels are changing their approach to food and beverage.

We have noticed quite a few changes at hotels over the last year or so to cut costs or drive revenues.  A few of the changes we see:

  • Many hotels have closed restaurants and bars.  Instead of having 2 or 3, many have closed all but one restaurant and one bar.
  • Hotels have cut costs and gone green by eliminating newspapers and printed folios.
  • Parking rates are on the rise.  Many hotels have increased the parking fees for both self parking and valet parking.
  • Breakfast buffets have really been changing.  The prices have increased and the quality and selection of food has decreased.
  • Overall staffing has really decreased.  Many hotels have eliminated positions like bellmen or concierges.  Also, we see longer lines at check in because the hotels have less GSAs with similar occupancy as in the past.

What are you doing to survive?  Please post in our comment section!

California to See a Record Number of Hotel Foreclosures

HotelAccording to an article by Alan X. Reay that appears on hotelnewsnow.com, the number of CA hotels in default or foreclosed on jumped 125 percent in the last 60 days and the state now has 31 hotels that have been foreclosed on and 175 in default.  Not surprisingly  about 87 percent of the hotels in default are non-franchised hotels.  Also, 75 percent of the hotels that are in default were either purchased or refinanced between 2005 and 2007.

The author estimates that hotel values are currently 50-80% lower than the peak as a result of declining revenues.

Extended Stay Hotels File for Bankruptcy

ExtendedExtended Stay Hotels has more than 680 properties under brands like Extended Stay America and Homestead Studio Suites.

Bloomberg is reporting that they filed bankruptcy on June 15th because they are ‘significantly over-leverged and the projected cash flows cannot continue to service over $7 billion in debt’.  Extended Stay Hotels employs about 10,000 people.