Hoteliers Must Expand
you are reading the papers these days you�re probably amazed at the
problems and foreclosures within the hotel industry. Hoteliers of
every size and description are failing, because over-leveraged
hotels are not generating enough cash flow to cover their expenses.
the first five months of this year, U.S. hotel occupancy declined to
53%, the lowest total since Smith Travel Research began tracking the
figures in 1987. Revenue per available room, on average, has
declined to $52.78 so far this year, the lowest tally since 2004.
published an excellent study by the CPA of a Los Angeles-based hotel
chain (5 properties) which showed that the property would generate
an average of $24 per room in cash business when they traded their
rooms. The author of the article even suggested that �giving the
rooms away� would be financially better than letting them sit empty.
Inasmuch as an occupancy rate of 62% to 65% is usually the breakeven
point for a hotel, today�s challenging times (53% occupancy) call
for some expanded thinking. Embracing barter with a greater emphasis
would be a good start.