Hotel Industry Braces For War

NATIONAL REPORT— Hoteliers are amassing a variety of contingency plans to help squeeze whatever costs they can out of their operations in anticipation of a war with Iraq and the travel slump that will likely follow. The impact of war, or potential war, may be hard to measure, but savvy hoteliers are taking precautions to ensure that any negative business trends are minimized. Most said they learned how to react quickly to a sudden halt in travel due to the events of Sept. 11, and are optimistic that the American public will continue to travel— even through periods of economic/political uncertainty. Of course, the impact on international travel to the U.S. figures to be much more severe if a war becomes reality. Also, many analysts warn that a war could drag on, which would most certainly mean more tough times for the hospitality industry— placing even more importance on the preparedness of hotel executives. Starwood Hotels & Resorts, Wyndham International, Hilton Hotels Corp. and Cendant Corp., and others surveyed by HOTEL BUSINESS®, all said they have given the subject much consideration and are already making moves to prepare their hotels with alternative operational tactics that would buffer a possible halt in travel. “We are keeping a close eye on things and will make the adjustments we need to make as things change,” said Marc Grossman TITLE? of Hilton Hotels, who added that it is hard to forecast exactly what type of action may be needed at the hotel level for properties to remain profitable. “A lot depends on if action takes place, when action takes place, the scale of the action, and how long it lasts.” Generally speaking, Grossman said that Hilton’s approach is to manage to demand at all times, including monitoring business during potential times of strain. “You really have to take a long-term view. You need to be smart about it. You don’t want to overreact,” he said. Cendant’s Peter Strebel shares a similar view. “We live in different times now. I don’t think travel will stop. We’re optimistic that the American public will continue to conduct their lives somewhat normally,” Strebel noted. With that said, Cendant is, however, working on some plans to aid its franchisees through what could be a stressful period. The company has updated the tactics it enacted following the events of Sept. 11 and is scheduling free revenue-enhancement workshops during April and May in more than 40 cities across the United States and Canada “to help franchisees maximize performance during the critical summer period,” he said. Cendant is also exploring leveraging its brands as a whole via the development of a marketing strategy that can be used for all its hotel chains, which would help increase brand awareness, Strebel said. “The one thing we have going for us as an industry is up-to-the-minute research that helps enable us to get into the psyche of the traveling public,” Strebel said. The data from continuous research would help all lodging companies decide what action, if any, will need to be taken to spike business, he added. However, Cendant may be better off than some other major lodging companies, since many of its brands’ properties are located in secondary and tertiary markets. These locations may fare better than big cities if a threat of terrorism resulting from military action with Iraq does surface, Strebel said. For other market segments, such as airport hotels, the affects may be intensified by a lack of air travel. “As war progresses, you have to watch expenses and have a plan in place to shut down floors that are not being used. We are taking every measure in our commercial division [airport hotels]to watch the expense side,” said Stephen Brandman, COO of The Pomeranc Group, which owns the boutique hotel 60 Thompson in NY and some airport hotels, speaking during a panel sponsored by the Cornell Hotel Society in New York last month. For its part, Wyndham International, has put its hotels on alert, and pl