Hotel & Motel Management - March 17, 2008 - (Page 25) www.HotelMotel.com/digital_edition HotelMotel.com | H&MM March 17, 2008 Special Report 25 Bottom line important during recession Third-party management companies say they are preparing for a downturn—sort of cur. Our primary focus is always on maximizing revenue and market share, in good times and in bad.” So far, so good Based on the varying portfolios, management companies differ on whether they see a slowdown in the industry nearly three months into 2008. Some segments already are seeing declines in occupancy; others are thriving. “Typically, every month we are reviewing trends as far as 12 months out, and we are making adjustments accordingly,” said Raul Leal, president of Miamibased Tecton Hospitality, which manages branded hotels as well as boutique hotels through the Desires boutique-hotels division. “So far, knock on wood, we haven’t seen anything that would qualify as a dip in occupancy rates. We are being cautiously optimistic.” Leal said that, if anything, he is seeing customers shop around. With a portfolio spanning several segments, Tecton is able to take a broad-based view of the market, and Leal said he sees customers searching for deals a little more than usual. “Travelers are being a little bit more cautious,” he said. Marshall, on the other hand, said he has seen dips in occupancy numbers in certain markets already. “Whether that’s signs of a recession or overbuilding, I’m not sure,” he said. “There has been a lot of overbuilding, and with a slowdown in the economy, demand is not catching up.” The ‘what-if’ game Based on the occupancy dips Marshall has seen in certain segments, management companies still have to determine the best ways to respond to a slowdown in the industry. They try to “stay ahead of the curve,” Leal said, and prepare for new ways to boost revenue in case of lagging occupancy numbers. “If we did see a decline, we would gather the entire workforce at a property and form a plan,” Leal said. “We’d make that plan for 90 to 120 days, or until further review.” Leal said initial dialogue would be with the general managers at each property, and it would be their responsibility to look at all expenses that could be considered questionable. “We go through it expense by expense and position by position,” he said. “We qualify the risk of whatever our actions are. Once we qualify the risk, we reduce the hours or the services that have the See Recession | page 30 Hotel Mela, a Tecton Hospitality/Desires luxury boutique property located near Broadway Avenue is a refreshing departure from the sleek and hip boutiques that have consumed the New York hotel market in recent years. By Jason Q. Freed ASSOCIATE EDITOR T take a major hit? Are these actions a direct result of the headlines they hird-party management read in The Wall Street Journal? companies are in contact The answer is no; rather, it’s with the general manag- because this is what manageers at the properties in their port- ment companies do. Managefolio on a daily basis. ment companies live They work around the SEE RELATED and die by the bottom clock to reduce labor STORY: line, and they constantRoles change hours, energy costs and ly are working to limit limit spending. They at boutique spending and increase Page 37 monitor occupancy revenue, regardless of numbers—while travwhether a recession is eling—on their BlackBerrys. in the future. They are worried. “You always have to worry Is this extra care being tak- about stuff like that,” said Mike en because a national recession is Marshall, president and c.e.o of looming and the industry could Marshall Management, based in Salisbury, Md. “It’s our job as a management company to drive as much to the bottom line as possible.” Are management companies worried? Sure. Are they preparing contingency plans so that if revenue per available room at a particular property drops to a certain figure, they fire a percentage of the staff? Not so much. “Our company is always focused on a forward-looking strategy,” said Walter Isenberg, president and c.e.o. of Sage Hospitality Resources. “We have plans in place to adjust our business model as anticipated market shifts oc- CIRCLE NO. 111 TECTON HOSPITALITY http://www.HotelMotel.com/digital_edition http://HotelMotel.com http://www.BittelUSA.com http://www.BittelUSA.com
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