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.
