Source:
The Hospitality Research Group of PKF Consulting Expenses Cut In Response In
response to falling revenues, US hotel managers did implement policies and
procedures that reduced the average operating costs of the typical hotel
by 5.2 percent. Unfortunately, this is less than the 9.9 percent
reduction in revenues. Therefore, the average operating profit
margin was lowered from 32.8 percent in 2000 to 29.4 percent in 2001. "With
payroll and related costs comprising 44.1 percent of all operating
expenses at the typical US hotel, labor is one of the first costs that
gets the attention of hotel management," says Woodworth. In
2001, hotel managers were able to reduce their labor-related costs by 6.6
percent. These savings were accomplished through a combination of
salary cuts, reduced hours, and the elimination of jobs.
"Talking to operators, careful consideration was given to reducing or
eliminating those positions that had the least direct effect on customer
service." Two
expenses that appear to have been beyond the control of hotel management
were utility costs and insurance premiums. In 2001, utility costs
increased 7.0 percent, while insurance payments grew a staggering 18.9
percent. "Given all the pronouncements from the energy
companies in late 2000, we knew utility costs were going to be a big issue
for hotel managers in 2001. The spike in insurance premiums was
amplified after September 11 and unfortunately continues to be a concern
in 2002," adds Woodworth. Interest Coverage With
profits off 19.4 percent, the ability of some hotels to cover their
interest payments was challenged. A special analysis of 562 hotels
in the PKF survey sample finds that 25.6 percent were unable to generate
sufficient cash from their operations (after capital reserve) to cover
their 2001 interest payment obligations. This represents a 38.5
percent increase from the number of properties unable to pay their
interest in 2000. "While this is certainly a significant
increase, it could have been more pronounced had the interest payments not
been reduced by an average of 8.4 percent," says Woodworth.
"The reduction in interest paid can be attributed to workouts,
re-financing, and some degree of lender forgiveness." A total
of 78.1 percent of the properties in the survey sample reported a decline
in their interest payment from 2000 to 2001. On
average, full-service hotels were able to cover their interest payments in
2001 at a coverage ratio of 2.01. This was down from 2.31 in 2000.
For limited-service hotels, the interest payment coverage ratio dropped
from 1.97 in 2000 to 1.84 in 2001. "Given the more stringent
lending requirements of the 1990s, the higher contribution of equity, and
a realistic understanding by the lending community of the current options
for hotel real estate, we have seen far fewer bankruptcies and
foreclosures during this industry recession as compared to the early
1990s," Woodworth says. The Importance of Benchmarking Given
the projected declines in revenue, the ability to control costs will once
again be a primary focus of management in 2002. "Many current
hotel owners and managers are new to the industry and have never
experienced operating in a recession. They are asking us to assist
them monitor expenses and profits in an environment of declining
revenues," Woodworth notes. In
response to this increased demand for expense and profit data, HRG offers
its clients Benchmarker, a service that allows hotel owners and operators
to compare the financial performance of their properties against a select
group of comparable properties. Hotel owners and operators
interested in HRG's Benchmarking products can contact Claude Vargo at
(404) 842-1150, ext 237. The
Hospitality Research Group (HRG), headquartered in Atlanta, is the
research affiliate of PKF Consulting, the international consulting and
real estate firm specializing in the hospitality industry. HRG,
along with PKF Consulting and the PKF Consulting Capital Markets Group,
are wholly owned subsidiaries of Hospitality Asset Advisors International,
a U.S. Corporation. HAA International has offices in New York,
Boston, Philadelphia, Washington DC, Atlanta, Houston, Dallas, Los
Angeles, San Francisco, and Singapore. Source
Contact details: Gary Carr Mark
Woodworth HVS
INTERNATIONAL/NYU PRESENT 2002 MANHATTAN HOTEL SURVEY Our
research and findings indicate that in 2001, the Manhattan lodging market
experienced a decline in operating performance prior to September, due
primarily to a softening national economy; the terrorist attacks of
September 11th further accelerated this decline. However, we forecast that
by 2005, occupancy in Manhattan will reach 1999 levels and average rate
will achieve 2000 levels. Operating History In
2001, the Manhattan lodging market experienced decreased performance
levels for the first time in nine years, primarily due to the impact of
the national economic downturn, which was compounded by a significant
increase in supply, a softening in demand, and the September 11th
terrorist attacks. However, we expect the Manhattan lodging market to
recover by the beginning of 2003. According to data
provided by Smith Travel Research (STR), a 9.7% decrease in demand and an
11.4% drop in average rate between 2000 and 2001 resulted in a 22.3%
decline in marketwide revenue per available room (RevPAR) during the same
period. However, during the longer term historical period of 1988 to 2001,
Manhattan lodging demand rose at an average annual compounded rate of
0.8%, while average rate and RevPAR increased by 4.0% and 3.3%,
respectively. Although the national economy stumbled during 2001, most
economic indicators for the New York metropolitan area (including
employment levels, retail sales, population trends, office vacancy rates,
and trade statistics) suggest further growth in the middle- and long-term
future. As such, we anticipate a recovery from the economic downturn by the beginning of 2003, and we believe that demand and occupancy levels in 2003 and beyond will be dictated by normal economic influences and the interaction of supply and demand. Based on the data from STR, 10,303 new rooms became available in Manhattan between 1988 and 2001. As indicated in the following table, the bulk of these rooms entered the market in two distinct cycles: 3,425 rooms entered the market between 1989 and 1992, and 5,511 rooms were added between 1997 and 2001. In 2001, the amount of available rooms citywide increased significantly, tremendously impacting the entire Manhattan hotel market; during this period, the market was trying to absorb 1,711 new rooms, while demand was declining as a result of the economic slowdown. It
is notable that between 1992 and 1995, supply rose by only 534 rooms, down
considerably from the rapid expansion experienced between 1989 and 1992.
Additionally, despite the remarkable strength of the market between 1995
and 1998, only 1,705 new rooms became available. Conversely, 1,660 new
rooms entered the market in 1999, followed by 1,573 new rooms in 2000, and
1,711 in 2001; these annual room supply increases were the highest
experienced in Manhattan since 1990. New Supply In 2001,
eight new hotels opened in Manhattan, resulting in a 2.8% marketwide room
supply increase, despite the fact that four hotels (representing
approximately 3.8% of the city's lodging supply) were damaged or destroyed
by the September 11th terrorist attacks. While Manhattan is often seen as
a collection of neighborhoods, the impact of these new rooms has been felt
citywide. Four new hotels, totaling 733 rooms, entered the Manhattan
market in the first half of 2002. Three additional lodging facilities encompassing a total of 1,004 rooms are anticipated to open by the end of 2002, bringing the total new supply for this year to 1,737 rooms; this translates to a 1.5% supply increase over 2001. The opening of the 860-room Westin in Times Square will account for approximately half of the new supply entering the market in 2002. The Westin will be the largest addition to the city's supply of first- class, convention-oriented hotels since the Crowne Plaza Times Square opened in 1991. This additional supply is expected to further affect the city's declining average daily rate and occupancy percentage. Approximately 70% of the city's new supply will be located in the Manhattan's Midtown West neighborhood, with 17% in Midtown East, and 13% Downtown. Manhattan Operating
Statistics HVS International compiled data provided by HotelRevMAX, a New
York-based hotel performance data company, to illustrate the effects of
the September 11th terrorist attacks on different classes of hotels in
Manhattan. The following table compares the performance of a
representative sample of Manhattan hotels for January through August and
September through December, as well as year-end figures for both 2000 and
2001; results are broken down by market segment: boutique, first-class,
luxury, and tourist. In the boutique market segment, supply increased at
38.0% (550,714 rooms) between 2000 and 2001, posting a 41.0% increase
(383,373 rooms) prior to September, 2001, and a 32.7% increase (167,341
rooms) during the last four months of the year. During the same respective periods, demand in this segment increased by 24.2% and 12.0% over the corresponding periods of the previous year. We note that only the first-class market segment registered an overall decline in room supply between 2000 and 2001, at -2.3%. This decrease can be attributed to the closings of the Embassy Suites Battery Park, the Millennium Hilton, the Marriott Financial Center, and the Marriott World Trade Center following the September 11th terrorist attacks. We note that while both the Marriott
Financial Center (January, 2002) and the Embassy Suites Battery Park (May,
2002) have since reopened, the Marriott Financial Center was completely
destroyed in the attacks; as of the time of this survey, no definite plans
had been set for this property. Additionally, the currently closed Millennium Hilton will reportedly re-open sometime in the future, after undergoing extensive renovations. As a result of the economic slowdown and an influx of new supply, all four segments registered decreases in occupancy, average rates, and RevPAR from January through August of 2001 compared to the same period of 2000. The tragic events of September 11, 2001, further challenged Manhattan's lodging industry, causing steeper declines across all segments. We note that the
untimely attacks occurred at the beginning of Manhattan's peak season,
negatively impacting the performance of the city's lodging industry. The
boutique segment felt the greatest impact of the economic downturn and the
substantial increase in supply, with a 16.7% decrease in RevPAR prior to
September of 2001 compared to the same period of 2000. On a full-year
basis, the boutique segment also registered the largest RevPAR decline in
2001, dropping by 25.6% over the previous year.
P.S.
-- the food is great but be sure to The
Miami Herald -
From MTV music videos playing above urinals to fish tanks
separating the sexes, off-the-stall restrooms are all the rage in
restaurants, clubs and hotels across South Florida. Need
to go? Learn another language, have your feet massaged, catch a show or be
the show while answering nature's call. Trendy
toilets can make the business at hand a more memorable and enjoyable
experience, said Michele Merlo, president of South Beach's Pelican Hotel.
The Italian fashion gurus who founded the Diesel clothing line also
created the Pelican. They
have turned the washroom into the watch room, with four seven-inch color
television screens built into the wall directly above the urinals. Often
on the toilet tube: the Fishing Channel. The cable station offers a lesson
in fly fishing while visitors zip their fly. "The
bathroom is always a weird place for men. It can be embarrassing,"
Merlo said. "We give you something else to look at instead of your
neighbor." The ode to the commode is allowing designers around the
country to relieve themselves -- artistically -- in the loo, said Michael
Adams, editor of Hospitality Design Magazine. "More
and more, bathrooms are becoming a place for designers to flex their
creative muscles," he said. "It's one of the last places left
that designers can try and get attention for their work. It's
sort of like a P.S. -- the food is great but be sure to also check out the
bathrooms." It can also be good for business, say the folks at
Sloan's ice cream parlor in Boca Raton and West Palm Beach. Like
a storefront window, everything is on display behind the glass-doored
restroom -- until you turn the door latch. Within seconds, the glass fogs
up and becomes opaque to give the user privacy. Owner
Sloan Kamenstein saw the trick door used in a New York conference room and
had the glass company fly south to install it for $15,000 a bathroom. His
Boca location has one and the West Palm Beach site has two. "It's
a lot of money, but it's paid for itself already," said Kamenstein.
"People come in just to see the toilet and end up buying ice
cream." Danger: Do not forget to lock the door. The consequences are,
well, a peep show. Starring you. "We've
had a lot of people who didn't realize they needed to lock it. You try to
look the other way and pretend you don't notice," said Kamenstein.
"Bathrooms can be so boring. We wanted to have a little fun with
ours. We wanted it to be over the top." And so it is, according to
the Travel Channel. The network has just named Sloan's powder room to its
list of "Best Bathrooms in the World." Especially in vogue:
desegregation. The owners of some public facilities are daring to go
nongender specific. "We
have television to thank for breaking down those barriers," Adams
said. The
la Ally McBeal unisex phenomenon has spread to Lincoln Road's Rumi lounge
and restaurant in Miami Beach. There, the high-end restroom is shared by
men and women alike. Rumi's
neighbor, Balans restaurant, has been known to give the full-bladdered
stage fright. Balans'
revealing restroom projects a user's shadow on the bathroom's surrounding
wall. Those waiting in line outside can see the silhouette of the person
squatting, sitting or standing as they use the toilet. "Some
people will use the handicapped ones downstairs instead," said owner
Paul Prodromou. At
Romano's Macaroni Grill, the longer it takes to go, the better your
Italian gets. The restaurant chain offers Italian lessons for beginners in
its bathrooms. Servizo
incluso? Is the tip included? Tavola per due, prego. A table for two,
please. The
women's restroom at the Forge in Miami Beach is fowl: an air-conditioned
bird cage with live lovebirds and finches. The popular attraction
sometimes leads women to drag their dates into the lounge. The
best seat in the house at Liquid night club is in its saltwater closet,
many male clubgoers said. There
lies the answer to the often pondered question: what do women do in there?
"Every
guy has this fantasy of finding out what's going on in the girls bathroom.
Why do women go in pairs and take forever?" said Dwayne Parker, a
partner in Bad Boys Unlimited -- the clothing, club and music outfit that
owns Liquid. Above
the mirror in Liquid's ladies room is a massive saltwater tank that
adjoins the men's bathroom. The view, as men are using the urinals, is of
the women's bathroom. It works both ways: women can also see into the
men's room. Although
there are no signs posted telling folks they may be watched, because the
view is of the public area of the bathroom, there is no expectation of
privacy. Hence, legal voyeurism. "It's
reality TV without the set," Parker said. "Most women don't know
the men are watching." The unsuspecting women wash their hands, reach
into their blouses and adjust their cleavage. They check their teeth for
lunch leftovers. They put on their mirror face while puckering up for
fresh lipstick. They tease and flip their hair while admiring their own
good looks. It's
the kind of stuff that's taken care of when no one's looking -- at least
no one of the opposite sex. Oops.
"Guys
love it," said Liquid regular Javi Prado of Kendall. "You get to
look at girls where you're traditionally not supposed to be looking."
WYNDHAM
OFFERS FREE CALLS FOR SOME -
A RARE MOVE IN HOTEL INDUSTRY The
radical shift in an industry best known for adding charges addresses
"the single biggest complaint" from customers, says Fred
Kleisner, CEO of the upscale hotel chain that operates about 200 hotels
and resorts. Members
of Wyndham's ByRequest program can make free, unlimited local and domestic
long-distance calls (excluding calls to Alaska and Hawaii), and fax, make
copies and surf the Internet free. Wyndham says room rates will not
increase. More
travelers are avoiding hotel phone charges by using cellphones, says
Robert Mandelbaum, of PKF Consulting in Atlanta, which advises hotels.
Hotel revenue from phone services fell 21% last year from 2000, vs. a 10%
drop in hotel revenue overall, he says. Phone
charges make up 3% to 4% of the average guest bill. Mark
Williams, travel director of PricewaterhouseCoopers, says Wyndham's policy
could save his company $ 1 million a year. "There's
a lot of noise about the add-on charges on hotel bills, and this could
quiet it for some time," he says. About
the only consistency in hotel phone charges now is that most chains charge
something: *
Marriott hotels charge $ 9.95 for 24 hours of high-speed Internet access. *
Hiltons bill 50 cents to $ 1.25 for each local call up to 60 minutes.
Calls exceeding 60 minutes are charged an extra 10 cents a minute. *
Ritz-Carlton hotels charge75 cents to $ 1 for local calls. There is no
charge for toll-free or credit card calls within the USA. Wyndham's
current ByRequest members automatically receive the free phone benefits.
New members must enroll in the free program before Sept. 30 and stay at a
Wyndham property before that date to be eligible. "As
we recover from last year and as business bounces back, we hope to attract
more business travelers," Kleisner says. Christopher
Elliott, travel writer and commentator, says he doesn't expect other hotel
chains to offer free long-distance anytime soon. When the economy
rebounds, he says, hotels likely will add charges to bills and revoke free
offers. CHINA
RELEASES NEW REGULATIONS ON OVERSEAS TOURISM EFFECTIVE JULY 1 BBC Worldwide Monitoring
- China released
Monday a new regulation governing Chinese tourists travelling abroad,
which will go into effect on 1 July. The
33-article regulation stipulates that foreign tourism destination
countries should be decided by China's tourism authorities with the
approval of the State Council, China's cabinet. The
rule also stipulates that travel agencies providing foreign tourism
services should meet the following requirements: -
Agency must have held international travel service qualifications for at
least one year. -
Agencies should have achieved outstanding accomplishments in organizing
visits of foreign tourists to China. -
And such agencies must not have been involved in any major unlawful
practices or had serious problems in service quality. The
regulation also requires travel agencies to safeguard the legitimate
rights and interests of tourists.
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