A BRIEFING FOR JAN. 29 TO FEB. 12, 2009
By Joe Brancatelli
· Hotel Outlook: Gruesome, Getting Much Worse
· And Yet, The New Hotels Keep Opening
· JetBlue Takes Another Run at Flights From LAX
· Air Jamaica Is Shrinking (For the Millionth Time)
· United Raises Red Carpet Club Membership Fees
· Virgin America Adds John Wayne/Orange County
· He's Not a Number. He's a Free Show Online.
The Hotel Outlook: Gruesome--and Getting Much Worse
The time spent clucking over the minutest details of how the airlines perform tends to obscure the state of the hotel business. What's good for us in the very short term--more and more properties offering lower and lower rates--is turning out to be a nightmare for the folks who actually own the bricks and mortar. Want to know exactly how bad? In Dublin, two 18-month-old hotels simply closed their doors last weekend. The properties, the 186-room Tallaght Cross and the 48-room Glashaus, both owned by developer Liam Carroll, may only be the leading edge of a tsunami of closures worldwide. According to a report released this week by a major hotel-consulting firm, the value of hotel properties dropped 14 percent last year and may drop another 20 percent this year. Add that to plummeting room rates and a nationwide occupancy rate that will fall below 60 percent in 2009 and PKF Hospitality Research says the number of hotels that won't generate enough cash to cover their debt will rise by 25 percent. Even solvent hotel owners "might find it more beneficial to default," explains Robert Baker, a senior PKF advisor. "With hotel values on such a precipitous decline, paying debt obligations could be viewed as good money chasing bad."
And Yet, The New Hotels Keep on Opening
You'd think that such a bloody outlook for lodging investments would mean a screeching halt to hotel building. And to some extent it is happening: Planning for new properties has generally ground to a halt. But literally hundreds of thousands of new rooms are leaking out of the construction pipeline, so you should take note of these new openings: A 429-room Westin has opened in Jersey City, just a few minutes by ferry from midtown Manhattan. A 291-room W Hotel has opened in the Buckhead area of Atlanta. Shangri-La has opened two new hotels: a 119-room property in Vancouver and a 409-room facility on the Oujiang River in Wenzhou, China. Avia, with 151 rooms, has opened in Savannah. The boutique property comes from LodgeWorks, whose principals own and operate the Hotel Sierra brand. Meanwhile, there are many reflaggings, too. This week's changes: Hotel Indigo has opened a branch near Paddington Station in London; it's an upgrade of and conversion from one of London's most disliked hotels, the Niki. Crowne Plaza is now the flag on the Executive West, a 588-room hotel near the convention center in Louisville, Kentucky. Hilton is now the name on the door of the 277-room former Radisson in San Antonio.
JetBlue Takes Another Run at LAX From New York and Boston
JetBlue Airways bailed on plans to launch flights to Los Angeles last year as the surging price of fuel made adding transcontinental flights impractical. Now that oil has returned to fairly sane levels--it's around $40 a barrel now--JetBlue is reviving its LAX plans. Beginning June 17, it will fly twice a day from its New York/Kennedy hub and twice a day from Boston. Virgin America will add five daily flights from its San Francisco hub to John Wayne/Orange County Airport. Service starts June 10. How did Virgin America get into the OC, a slot-controlled airport that once had a long waiting list of potential carriers? For starters, one carrier flying there (Aloha) went out of business and the others ahead of Virgin on the waiting list (Westjet, Air Canada, Hawaiian and AirTran) apparently decided now wasn't the time to launch new flights.
Air Jamaica Is Shrinking (For the Millionth Time)
Air Jamaica, which is always financially stressed and forever growing and shrinking its network of flights, is shrinking again. The carrier will drop its flights to Jamaica from Atlanta, Los Angeles and Miami. It will also drop two intra-Caribbean routes to Barbados and Grenada. Speaking of Jamaica, JetBlue Airways will fly there for the first time. Beginning May 21, it will launch service from its New York/Kennedy hub to Montego Bay. Aeromexico begins regional-jet flights between Albuquerque and Chihuahua on February 9. Put this one in your futures file: Aer Lingus and United Airlines say they will launch flights between United's Washington/Dulles hub and Madrid in March, 2010. The code-share service will be operated by Aer Lingus.
United Raises the Price of Red Carpet Club Membership
So what would you do if you're United Airlines and you've closed a slew of Red Carpet Clubs, let their physical condition deteriorate and slashed in-room amenities, beverages and snacks? Raise prices, of course. Effective February 28, fees rise $25-$100 annually depending on your status in Mileage Plus. You can see the new price schedule here. A branch of Gladstone's, the Malibu Beach fish joint, has opened at LAX. A medical clinic has opened in the Concourse A/B Link at Philadelphia International. The 255-room Westin Tampa Bay Airport has opened about three miles from Tampa International.
Business-Travel News You Need to Know
American Airlines will link New York's LaGuardia Airport with a nonstop to Charleston, West Virginia. The six-day-a-week service begins April 7 using 37-seat regional jets. Speaking of American, it has struck a deal with NBC to provide in-flight entertainment. That means NBC will end its deal with United Airlines. Hawaii regulars may remember the name Aston Hotels. It was sold to ResortQuest and dropped the Aston name years ago, but now ResortQuest has decided to call the Hawaii properties Aston again. The company that created TripSync, an online travel-calendar service, has gone into bankruptcy and will be liquidated. Travelers with food allergies and other eating and health issues take note: A company called Select Wisely sells flash cards translated into dozens of languages. They are designed to help you communicate special needs to hotels, waiters, restaurants and food shops.
He's Not a Number. He's a Free Man--and He's Free to View, Too!
I mentioned the death of actor Patrick McGoohan in The Brancatelli File last week and urged you to find DVD copies of The Prisoner, his seminal 1960s television series set at the phantasmagoric Portmeirion Resort in Wales. Several sharp-eyed JoeSentMe members promptly E-mailed me to point out that AMC is offering all 17 episodes for free at the AMC site. The freebies are meant to stir up interest in the AMC movie remake, which has been years in the making and is due sometime in 2010.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.
This column is Copyright © 2009 by Joe Brancatelli. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.