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06/30/2009

Hoteliers Must Expand Thinking

If 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.

In 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.

BarterNews 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.



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