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A BRIEFING FOR AUG. 20 - SEPT. 3, 2009
By Joe Brancatelli
· The Hotel Industry Is in Freefall Now
· Meanwhile, Back at the Development Pipeline…
· US Air Retreats in New York, Holds on in Philly
· Global Entry Expands to 20 Major U.S. Airports
· Hertz Tests Photographic Scans of Rental Cars
· Delta Dumps That Wacky Salt Lake-Tokyo Route
· An Outrage Atop a Crime at a Connecticut Marriott
Hello, Room Service? Send Up Some Financial Relief!
The ivory-tower bean counters who run the nation's major hotel chains have been very good at sticking their pin-sized heads into the proverbial sand in the last 18 months or so. Their theory is that they are only franchisers and it's no skin off their nose if too many foolish real estate types bought and built hotel buildings and became franchisees. But with one in three hotel properties estimated to be upside down on their mortgages and one in four on the verge of bankruptcy, this might be the week when hotel chains realize that franchisees are in deep financial doo-doo. Here's the roster of hotels that tanked in one form or another this week: The year-old InterContinental Chicago at O'Hare Airport and the iconic Radisson Los Angeles Airport (a former Stouffer, a Renaissance, a Westin and Hyatt) both went into bankruptcy. The downtown Sheraton Orlando faces a September 3 foreclosure sale after its owner could not exit bankruptcy. The month-old, $65 million Hotel Monaco in Baltimore was hit with a $184,000 million mechanic's lien and may face a public auction next month. The Holiday Inn East at Louisville Airport in Kentucky says it will close its doors by the end of September. The 51-room Lotus at Diamond Head in Honolulu (fka the W Waikiki and the Colony Surf) was sold at auction. And the classiest hotel in Minneapolis, the Hotel Ivy, was placed in involuntary court-appointed receivership.
Meanwhile, Back at the Development Pipeline…
Lest you think a total industry meltdown would slow the development of new hotels, consider this week's new crop of openings. If there is any bright side to these newbies, consider that several are actually in areas that honestly need new properties. One example: the new Hilton Garden Inn branches in Troy, New York, and Presque Isle, Maine. Then there's the new 144-room Residence Inn in Yonkers, New York. One property that isn't opening into a hotel shortfall, however, is the 155-room Aloft, one of Starwood's new brands, near BWI Airport in Baltimore. … Big doings in the luxury segment, too. The Hotel Bel-Air will close on September 30 for a renovation that may take up to two years. And Mandarin Oriental is pulling its name off its hotel in Macau, China. The property has been renamed the Grand Lapa. …Radisson has planted its flag on the former Red Lion hotel in Baton Rouge, Louisiana.
US Airways Retreats in New York, Holds on in Philadelphia
Last week's slot swap between Delta Air Lines and US Airways can only be viewed through one prism: US Airways is retreating from still another market where its once was a substantial player. By swapping 125 slots and a slew of gates at New York/LaGuardia to Delta for a few dozen slots in Washington, US Airways not only ended its commuter operation, but it also all but ceded the LGA terminal that it built in the early 1990s. And by moving its East Coast Air Shuttle flights to LGA's distant Marine Air Terminal, the carrier has signaled its willingness to sell that part of its LGA operation, too. (US Airways' defense: It loses money in New York and yields are better in Washington.) But the New York pullback is somewhat mitigated by better news about 90 miles away in Philadelphia. Five years into its battle with Southwest, US Airways seems to be holding its own in Philadelphia. Although Southwest is renovating a terminal at PHL, it is currently reducing flights. Recently gone from Southwest's PHL schedule: nonstops to Los Angeles, Oakland, Hartford, San Antonio and Columbus. And while Southwest launched its first flights ever from Boston/Logan this week, one route it isn't serving is Boston-Philadelphia. That's a cash cow for US Airways and walk-up fares on the airline's 14 daily flights are as high as $1,000 roundtrip. "I wouldn't go so far as to say US Airways has beaten back Southwest, but at least they have bought themselves a few more years here," one skeptical airline executive told me this week. "And any time US Airways doesn't run from a Southwest challenge, they can declare a victory. It may be Pyrrhic, but, for now, it's a victory."
Global Entry Expands to 20 International U.S. Airports
The low-key program to speed up customs and immigration clearance for U.S. citizens returning from international destinations is getting a much larger footprint. Global Entry, which allows travelers to bypass regular passport control and use special biometric kiosks, has expanded to 20 major airports. New Global Entry airports are Boston/Logan; Dallas/Fort Worth; Detroit/Metro; Fort Lauderdale; Honolulu; Las Vegas; Newark; Orlando (both International and Sanford); Philadelphia; San Francisco; San Juan; and Seattle. Global Entry kiosks are already available in New York/Kennedy; Houston/Intercontinental; Washington/Dulles; Los Angeles; Atlanta; Chicago/O'Hare; and Miami. Global Entry costs $100 for five years and is also valid for entry into Amsterdam through the Flux Alliance.
Business Travel News You Need to Know
One of the wackiest routes launched by Delta Air Lines--Salt Lake City-Tokyo--is being dropped after only four months. Delta says it will return next year. Ri-i-ght. … AirTran Airways has moved to Concourse B at the airport in Charleston, South Carolina. … Here's one to watch: Hertz says that it is testing equipment that will photographically scan vehicles for dents and dings before and after rentals. Hertz claims it loses $170 million a year to damage payments and the very clear implication is that we're to blame for the state of its cars. A word to the wise: If Hertz photographs the vehicle before it allows you to depart, protect yourself by taking your own photos with your mobile phone. Do the same thing before you relinquish the vehicle when you return it. That'll allow you to dispute Hertz if it claims you damaged its vehicle.
I Have No Headline for This Outrage
In October, 2006, a woman was raped at gunpoint in front of her two children in the parking lot of the Stamford Marriott Hotel. A year later, a 56-year-old drifter pleaded guilty to the crime and was sentenced to 20 years in jail. In May, 2008, the woman filed suit against the hotel. Earlier this month, as part of its defense, the Stamford Marriott claimed that the rape victim was careless, negligent and "failed to exercise due care for her own safety and the safety of her children." When this outrageous defense became public last week, Marriott's corporate offices in Bethesda, Maryland, rushed out a statement insisting that it was "profoundly sorry such a terrible thing happened" and said the hotel's filing "created a mistaken impression that Marriott lacks respect." On Monday (August 17), the owner of the Stamford Marriott withdrew the claim.
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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.