THE HOTEL INDUSTRY TRYING TO MAINTAIN THEIR MARKEY PLACE DURING DOWNTURN

Implications: Are there going to be more layoff's in the hotel industry? Will the major chains be able to weather this short fall? Where does this leave the smaller independents? Is there going to be a rainbow in the near future - how long will this last??

Analysis: The hotel industry throughout the country face some hard decisions in the very near future. The most important one would be how to maintain room count and their bottom line. Some in the industry are finding it necessary to offer discounted rooms. I think it may soon be the rule rather than an option. The actual cost of maintaining a room per day has not risen to unbearable costs. So where can the cuts come from - not to hard to figure. It will be with the furloughs of employees until business gets back to where it should be. The larger chains have the advantage over the much smaller and independent hotel and motel properties. It will become especially difficult for the road motels to survive with the cut back in auto travel and the high cost of fuel. The fact is, all cost are up and not easily covered by independents.

I not sure that anyone has the quick answer for this downturn on the hotel and leisure industry. In a recent article, I wrote about the Las Vegas hotels going into the room discount mode. They are making a strong effort to add additional rewards to their customers for coming to their properties. These are coming in the form of gasoline discount, food & beverage specials and room discounts. There have been some layoffs in Las Vegas, however, in order to maintain their staff some properties have opted for day cutbacks. That is, reducing the work week to three or four days, thus saving the employees from a temporary furlough. A better scenario, I suspect, for both employee and employer. The hotel industry in general will have to look a bit harder into these type of incentives.

This will not last forever - Having spoken with several executives in Las Vegas over the past few weeks, their general thought is that they expect the recovery process to come sometime in the first quarter of 2009. I hope we see some good improvement by the second quarter.

Having said all of that, I am very pro hotel and leisure industry - There will probably be some casualties, however in short term they will have to find ways to get through this downturn. In the long run the industry will survive to smile another day...........