Hotel Occupancy and RevPAR Increase compared to same week in 2009
Submitted by
CalculatedRisk on Thu, 03/11/2010 - 8:33am (78 comments)
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We are at normal - the new normal.
ME, Myself and I first.
Dang it, thats what you get for trying in US.
From a
perspective, it was interesting to watch the collapse.
But as Rob Dawg has pointed out, the hotels are losing money at these occupancy rates - many hotels can't even cover their operating expense, much less their debt.
So this is good news - perhaps a clear end to cliff diving - but it is a long climb up from here.
best to all
San Francisco Hotel Owners Files for Chapter 11 (Update1) - BusinessWeek
March 10 (Bloomberg) -- The owner of two San Francisco boutique hotels and an affiliate owning a third property filed for Chapter 11 bankruptcy court protection.
Personality Hotels III LLC, the owner of Hotel Frank and Vertigo Hotel, and Hotel Metropolis II LLC, the owner of Metropolis Hotel, filed bankruptcy petitions today in U.S. Bankruptcy Court in San Francisco.
Government Financial Bailout - GMAC Bailout Could Cost Taxpayers $6.3 Billion - CNBC
Now that is the funniest thing I've read on this blog, ever. Race to the bottom, my friend.
dryfly, yeah - but I don't think hotels can survive for long at these occupancy rates - so the weaker ones will have to close down. I wonder if your are seeing more people in hotels? I remember last year when you had the hotels to yourself!
best wishes
Are rooms in closed hotels no longer "available"?
the new normal
dryfly, I tend to agree. Looking over our business numbers for the past 7 years, we've seen phasic patterns of sales/traffic (only some of which are because of snow) which repeat in predictable ways, but our ceiling/floor numbers have basically found new plateaus. And they aren't higher. We're just coming out of serious slump, and 'the sky is falling,' singers in our group have quieted some of late.
It feels like wound-licking time, rather than celebration time. Although we're still alive
Can a
even grow in a nuclear wasteland?
Talk about top-ticking a market. Opened about a year ago. Right across the street from WaMu's headquarters.
Business & Technology | Posh Four Seasons project in downtown Seattle faces liens, lawsuits | Seattle Times Newspaper
"More than a year after the $120 million Four Seasons Hotel and Private Residences opened to considerable fanfare, a dozen firms that designed and built the ultraluxury project say they haven't been paid in full.
They have recorded claims totaling more than $34 million against the downtown Seattle building. The largest lien, for $23.7 million, was filed in August by Lease Crutcher Lewis, the project's general contractor.
Most of the other liens were filed by subcontractors who say Lease Crutcher Lewis, in turn, hasn't paid them. Two of those subcontractors last month took the next legal step to collect what they are owed by filing lawsuits.
In an e-mail, Lease Crutcher Lewis CEO Bill Lewis indicated the Four Seasons is experiencing financial difficulties.
"The Four Seasons project is not immune to impacts related to current market conditions," he wrote, calling those impacts "significant."
The 21-story building, at First Avenue and Union Street, features 36 of the most expensive condos ever marketed in Seattle, atop a 149-room hotel. Only one condo has been sold during the past year, according to county records, leaving 13 still on the market."
CalculatedRisk wrote:
Reservations are still optional.
I have noticed that whenever we get into a pro/con discussing about living abroad, CR puts up one of these hotel posts and a new thread starts.
I think that's a hint.
CalculatedRisk wrote:
Well - welcome to my world - it has been like that in mfg for a couple of decades. The first thing we ask when expanding is [1] is the demand there long term to justify it and [2] where are the breakevens so if it isn't there how far can we cut to fall back to those demand levels - then if the project is still a 'go' - it's forecast, forecast, forecast - constantly - so as to not get surprised by actual demand when shock of shock it doesn't come in as rosy as wished.
I realize the services side of the economy thought they were immune from this - well they aren't - and the only glimmer of good news I have for them is they'll be a lot wiser although sadder when this is over.
It must have "unexpectedly" snowed in a lot of places during this time frame.
OT (if there is one): interesting article about cities treating actual homeowners like bandos, because they can't keep up repairs or afford all city services:
No fridge is better than no house | Jennifer Abel |
Comment is free |
guardian.co.uk
If you see a woman drowning the decent thing to do is toss her a life buoy, or at least leave her the hell alone; sitting on her head to push her deeper under water is wholly unacceptable behaviour. Unless you live in America and work for some local-level housing authority, in which case it's part of your job.
Being poor sucks in any country but especially in the US, which is so proud of being the Richest Nation on Earth that it makes sure everyone lives up to that whether they can afford to or not. Consider the case of Avondale, Arizona resident Christine Stevens, who has been in deep water (financially speaking) since losing her bank job in January 2009. She decided to discontinue her electricity service and make do with solar panels – Arizona has no shortage of sunshine, after all – and using an ice box in lieu of a refrigerator.
But such frugality defies Avondale city codes, which require a refrigerator, heating and cooling system, and electricity enough for all. So Stevens' house was condemned, and Stevens kicked out. "We explained to her that the panels weren't enough to sustain a quality of life there," Avondale's code enforcement manager said. Stevens is back in her home now, after spending 11 nights sleeping in her car, but could still lose the property.
(much more)
The Brits know we're barbarians.
"At any rate, my point was that the American position that it can tax its citizens for income earned worldwide seems to stem from a certain level of American exceptionalism at some point, which is justified it seems by events of the past century and not those of the current one."
Canada does this as well and I'm pretty sure the UK started as well recently.
dryfly wrote:
That really is an interesting point....real estate going the way of manufacturing as dead industry in the US. I hadn't though of that one.
On the development deals I've worked in California, even just starting out in the industry, I was shocked to see the lack of demand analysis from major industry players.
1 currency now -yogi wrote:
I thought in these calculations, no, but don't quote me on that.
I'm not sure if I've linked it or not, but there is a Dallas hotel that is only occupied by about a dozen tenants, whose purpose is to keep watch on the place and keep homeless and vandals out. They are trying to get it turned into a homeless housing project, but weird to see an entire hotel essentially vacant.
Centaur, operator of Colorado casino, files for Chapter 11 bankruptcy - Denver Business Journal:
BBC News - Bank of America sued for seizing parrot
Conjure Bag affirms his November 2009 forecast.
"Recession 2010-Q3"
27 months deep into the recession -------->survivor's bias
Insert this for any of these industry indexes/surveys where only ongoing concerns report.
CalculatedRisk wrote:
Some places I definitely am seeing more folks - but rates are coming down - especially for corporate biz travel. I was in eastern Iowa calling on a large ag equip mfgr and was able to get the corporate rate - it was 50% off what I was first quoted. I'm used to getting 25-30% off but this was a near record.
Oh and the place was full of folks like me - other hotels nearby unwilling to wheel & deal with the big green machine had nada, nothing in their parking lots.
Price signals work.
The other States.
They're providing services to ex-CA residents but not receiving any payment.
Bob Dobbs wrote:
I learned if from watching you! They know that too.
The house linked in the link is truly awful, but not as awful as charging an old lady $18k to demolish her own house.
black dog wrote:
I wonder if these rooms count as "unoccupied"? I doubt it, probably only if available to public.
Sahara closes two hotel towers due to low demand - Breaking News - ReviewJournal.com
Yikes, this is not good at all.
Big ax looming at the FDNY: Threat of 1,000 layoffs, closing of 62 fire companies
dryfly wrote:
I knew it, I KNEW IT: dryfly is Bruce Banner.
poic wrote:
I don't have a link, but I'm not sure this is the case from the people I talk to.
Anyways, fear not, I pay plenty for the services I never use, but at least it warms my heart to hear from CR comments about all of this hole digging and filling up I get to pay for but never see.
On to a new topic...
mp wrote:
Wasn't it Q1 2010 half a year ago?
dryfly wrote:
A regional higher-end hotel chain (kinda b&b hotels) has been offering half-off weekdays to "special friends" (ie anyone who's stayed there recently.) Now they're offering it to friends of special friends around; just share that discount code around as much as you like, Bunky.
I dunno about business travel, but these discounts may be having an effect on discretionary stays. And again you have to wonder how sustainable it is.
I'm not sure that is a given. If the banks will make loans for new hotels, people will build them. By the time the banks are willing to do this again, all will be forgotten and a new crop of big swinging dicks will be all ready to make their mark.
Case in point: there used to be a guy here with the handle DC1000. Two years ago he was telling us about all his great residential and CRE projects he was getting funding for. Many warned him this was not a good idea. He didn't listen. In fact he was quite arrogant, as many young BSD's tend to be. And if i recall correctly, he went TU shortly thereafter. if he had lived through the DC market in the late '80s early '90s, like I had, he would not have made that mistake.
We will repeat these mistakes again? It is what we do.
Conjure says, "Liquidate the hotels, the farms, the factories, the offices, the homes!"
"Liquidate all of it!"
Which is worse - bankers or terrorists wrote:
No. 2010-Q3.
Way OT, but USAToday is reporting Merlin Olsen died. What a KA player he was.
Here in AZ they slashed rates and they're still slashed, but occupancy has stabilized. More of the new normal.
OT,
That's changing. NYC is going after somebody(a sysadmin or something like that) who not only doesn't have a physical office in NYC, but has never actually been there as he works remotely.
CalculatedRisk wrote:
Agreed. I think it will be a healthy sign to see a gross reduction in available rooms. I don't begrudge the hospitality industry a healthy market but until supply shrinks to meet a realistic demand model everyone suffers. Too many rooms will do to RevPAR what too many houses are doing to OER and what too much retail space is starting to do to CRE. Same disease, different incubation periods.
noob goldberg wrote:
LOL - here's a little more trivia regarding said visit.
So I'm quoted a price earlier on the phone [individual w/ AAA discount - okay but no deal]... I go into the lobby and I ask the guy if the corporate discount is better... he asks who I work for and is it the big dog in town... I say no but I have meetings there tomorrow - we're a supplier. The lobby is full of people checking in - some obviously retired vacationers passing through - so instead of calling out the room rate - he writes it on a piece of paper and slides it over to me. I give him a silent thumbs up. He was scared there'd be a riot if the grey hairs heard what I was paying.
It was too funny - I'll remember this one all my life.
mp wrote:
In process sir - soon we'll be able to hang a 'Mission Accomplished' banner - where do you want it?
I did some digging into this exact question a few months back. IIRC, the member chains report both the numerator and denominator in the occupancy rate, so while the answer is "it depends" I'm 100% sure that no chain is reporting occupancy based on shuttered hotels. I'd be surprised if most of them weren't pulling everything they could out of their denominators - i.e. when reports surfaced here that certain hotel operators were staying open but closing off entire floors, I bet those chains were counting those rooms as "unavailable" as well.
Dryfly put it best - this is the new normal in the hotel industry - it'll be a decade at least before that changes.
Rob Dawg wrote:
Productivity is not the issue.
dryfly wrote:
Was he a 'Merican? In some countries this is how negotiating is done, or they bang on a calculator for a while and then show the result.
I always find it amusing and fun. The real fun is if they hand you the calculator.
CaptainMorgan wrote:
Absolutely.
mp wrote:
Only if we get to liquidate the banks holding all the loan paper on the above in the bargain.
It would make the S&L conflagration of the late '80s look like a campfire, though - so I'm not holding my breath.
dryfly wrote:
In process sir - soon we'll be able to hang a '任务完成' banner - where do Hu want it?
Fed Shoulders AIG Loan Losses to Ease Sale to MetLife (Update1) - BusinessWeek
March 11 (Bloomberg) -- The Federal Reserve Bank of New York and American International Group Inc. agreed to shoulder as much as $450 million in losses tied to the insurer’s Japan real estate bets as part of the sale of a division to MetLife Inc.
Rob Dawg wrote:
With a hotel or CRE, there is usually quite a bit of continuity from operating ok to very troubled and filing bankruptcy and operating after bankruptcy
Housing not so much with a foreclosure, but the end result is very similar.
LOL - Good one Dawg - exactly the case.
Rob Dawg wrote:
Idk....I think our destruction of the bond market that would go along with the destruction of the banking system would make you know Hu pretty unhappy......
thanks
"March 11 (Bloomberg) -- The Federal Reserve Bank of New York and American International Group Inc. agreed to shoulder [care of the us tax payer] losses"
that bloomberg article had a typo.
CaptainMorgan wrote:
You know we are on the glide path to third world status when the native born understand 'Bazaar Economics' too.
Which is worse - bankers or terrorists wrote:
He'll have all these maturing short term USD essentially trapped in DeflationAmerika. Hu's going shopping. And he won't be buying RRE or hospitality, he'll be buying mfg capacity, resources and infrastructure and we won't be in a position to object.
mp wrote:
Liquidate the banks.
I think it will be a healthy sign to see a gross reduction in available rooms. I don't begrudge the hospitality industry a healthy market but until supply shrinks to meet a realistic demand model everyone suffers.
But will supply shrink? How many hotels have closed or will close shortly (and therefore not show up in the survey) but after going through foreclosure open up a few months down the road with a great new cost structure and clobber the currently 'healthy' ones? I don't see any other option for many (interstate, for example) hotels to be anything but hotels.
can I liquidate some banksters ..... please ?
dryfly wrote:
In some respects yes, in other areas they are simply trimming the fat after years of enjoying excessive amounts of fat.
Rob Dawg wrote:
Why buy mfg capacity when you (Hu) have it at a cheaper basis at home, plus it keeps your constituency employed? If you were going shopping, you'd want the currency you're buying in to the be cheap; right now, Hu is subsidizing his....
CaptainMorgan wrote:
In my world - mfg - we are so far beyond trimming fat we need bone saws to trim more. Bolt cutters work too.
dryfly wrote:
Services are still pretty fatty. Many services are pure fat, depending on your point of view.
Rob Dawg wrote:
Manufacturing capacity? When he's already got more than he'll ever need?
No, he'll be buying all the raw materials. And the women. They need women.
dryfly wrote:
Word is in the world of California residential real estate, I'm here from my friends that some of the players are buying land again. But, instead of staffing up large divisions again, they are developing everything with external consultants. This is typical of the end of recessions (temp hiring before permanent) but this time I'm hearing it's the new model. Yes, it is illegal, but homebuilder law breaking in the past has lead to what repercussions?
mp wrote:
That I agree with. The US will be like the next Africa. A third world country, except with all the nukes. Sounds like a place I'd like to live.
OT, A reason why consumer card balances decreased--http://www.boston.com/business/personalfinance/articles/2010/03/11/credit_card_debt_fell_because_of_write_offs/
CalculatedRisk wrote:
The bankruptcies and hotel closing will help the market by reducing the glut of accommodation. It's crazy how overbuilt it is even just around me. I think the correlation between the slowdown of new projects opening their doors and the drop in occupancy is the most significant metric.
~splat
mp wrote:
If I was Hu, I'd start a colonization program.
They need women because they don't have enough of them to make the transition to a consumption-based society.
They'll pay good yuan for women.
dryfly wrote:
How many times have you heard "Why can't we make it in China ? We can offshore the software too ? Who cares about the quality it's CHEAPER !"
~splat
Yes, manufacturing capacity. For the same reason the Japanese did it and a few more. There is a strategic interest in having a US presence. There are some things the US still does better and what cheaper way to gain expertise than to buy at F.I.R.E. sale prices now that we've stopped giving it away and letting them steal it? Third, there are some things the US just won't allow to manufactured offshore. Fourth, it is a competitive move to tie up the assets against potential competition.
Which is worse - bankers or terrorists wrote:
Dawg is right.
A couple years ago when Maytag was on the blocks there were rumors Haier [Chinese] was going to acquire Maytag - it would have been a perfect fit and been a spike in the heart of Whirlpool. Haier would have used their Asian sourcing to make transmissions, motors, controls - ship them to assembly plants in US and produce Haier products with Maytag labels. It scared Whirlpool so much they were forced to beat the Haier offer and lock them out for awhile longer.
I've seen what goes into making & engineering a washing machine, drier, etc. - this would have been quite the coup had Haier pulled it off. It would have grown jobs in China even more than here [a mainline for their component producers w/out US Wall Streeters & hedgies taking their cut - it would have gone to Haier mgmt instead].
The stronger the yuan gets the easer these kinds of moves are & the harder it gets for the Whirlpools to block them. It's why the Chinese will eventually let the yuan appreciate.
The Ritz-Carlton Lake Las Vegas, a five-diamond hotel at the troubled resort community in Henderson, told its 340 employees Monday that it will close on May 2.
Casino MonteLago, the only gaming location inside the upscale but bankrupt Lake Las Vegas, will close next month, burdened by a lack of visitation and the impending shutdown of the Ritz-Carlton Lake Las Vegas in May.
........the state is emptying out.......
What:?
black dog wrote:
Just catching up. That is in fact a part of what happens. If you haven't yet, you'll soon encounter "under new management" signage frequently. And some good deals. But the operations are soon stripped down by cost cutting.