Hotel Hell: an oversized market, reducing the hotels business threaten survival. (Industry Overview)-hotel
Milwaukee-area hosts tone, and, secondly, the bellhop or porter, and can wait in the room, a girl or a little 'more.
"Almost everyone I know to cut workers," says Robert Green, Executive Vice President of the Association of Irish Inn Wisconsin, Milwaukee. "You can not hold rulers, but clean rooms."
These are difficult times in the hotel. The use of all-time low and the rates will not shrink much in four years, hotel operators are pressing for ways to cut costs and forcing others off the market completely off balance.
Number of empty rooms in the Milwaukee area increased in 1991, according to statistics from Smith Travel Research, market society Tennessee hotels search. The report included the area in 1991 the employment rate of 60.6 percent hotel - the lowest in the last five years. The national employment rate of 60.9 percent, the 10-year low.
The inn
An oversupply of rooms. . .
Percent Percent
changes in the changes
Camera offers years years prior to the previous year, demand
1991 4.122.000 1.9 2,497,000 -2.7
1990 4.045.000 1.0 2,567,000 1.2
1989 4.002.689 5.5 2,536,926 6.1
1988 3.794.958 6.4 2,389,977 7.4
. . . has kept prices stagnate
Percentage
Changed jobs in Milwaukee area
Annual (%) Room Rate of inflation last year
$ 1.4 NA 1991 60.6 52.61
1990 63.5 51.89 4.5 6.1
1989 63.4 49.65 1.2 3.6
1988 63.0 49.07 2.1 3.7
NA - Not Available
Source: Smith Travel Research, Gallatin, Tennessee
The average hotel night accommodation in the metropolitan area was $ 52.61 in 1991, an increase of 7.2 percent since 1988. Inflation at 13.4 percent between 1988 and 1990. In recent years increasing rates of 1.4 percent over the previous year.
"If the normal cost increases, but not to raise room rates, with the margin reduced to nothing," said Randy Smith, president of Smith Travel Research, which compiled the statistics of the local 40 properties totaling approximately 6500 rooms.
'It is very difficult "
Smith figures that show what happens when a market oversized hotel in conflict with the economic slowdown.
Since 1988, the number of rooms in the Milwaukee market grew 8.6 percent, while only 4.5 percent. In recent years, the demand dipped 2.7 percent.
"... These figures show that it is even better," said Kirk Drusco, Vice President and General Manager of Embassy Suites Hotel, Brookfield.
"It's very difficult now," he said. "What we see fewer and fewer people who travel and those who travel more aware of the budget."
Business guests have the most to reduce the operators have agreed hotel. Many companies are cutting travel, while others limit travel.
The balance of elegant red ink in May 1992 to eradicate the weakest of Milwaukee-Area Hotel.
"It 'like a big poker game - you must know when to hold and know when sometimes," say
s Nicolas de Segonzac, general manager of the Wyndham Milwaukee Center Hotel, Milwaukee.
Most hotel operators, such as the 1992 plan in 1991, the possibility of growth in the last six months. But in the meantime, operators of hotels in the struggle for survival.
"The only game in town now to steal market share from man in the street," said Segonzac.
Sale
In many areas, operators have hotel ratings decided to play the parts of the market, and if the hotel, facilities or services to sell for sale.
Chicago has a limited partnership with the Holiday Inn West Milwaukee, 201 N. Mayfair Road, Wauwatosa, looking for buyer for the 235-Room Hotel, The Business Journal learned last week.
KANIEWSKI Scott, a representative of the VMS National Hotel Partners has confirmed that the sale, said that the restructuring of the partnership in the middle of the 40-hotel portfolio.
"Cooperation has decided to sell selected assets," he said. "This has nothing to do with the performance of the hotel. It is a viable property."
KANIEWSKI refused to disclose the asking price, but an announcement in the February 3rd edition Hotel & Motel Management, owners seeking $ 5 million for the hotel, which is the gross income of more than 4.5 million U.S. dollars.
Wauwatosa in 1991, self-assessment of the hotel was 6.96 million U.S. dollars and the city on the market value of 8.23 million dollars for the property.
Hotels, which recently changed hands as follows:
* Olympia Resort, Oconomowoc - The State of Wisconsin Investment Board and Concord Commercial Corp., a bank in New Jersey has taken over Olympia in January launched a new management company and to seek a buyer for the 380-room hotel.
* Best Western Midway Motor Lodge, Glen Dale - Silent Development Inc., a Milwaukee real estate developer, has sole ownership of the 134-room hotel in October 1991 and renamed Manchester East Hotel and Suites.
* Days Inn, Glen Dale - The Marcus Corp., Milwaukee, bought the hotel in November 1991 and converted into Woodfield Suites.
Other hotels in franchise changed flags. The former Howard Johnson Hotel 611 W. Wisconsin Ave., Milwaukee, has been transformed into a Holiday Inn and the Dillon Inn, 11111 W. North AVE., Wauwatosa, is now a Holiday Inn Express.
All statistics contained in the report Smith, the study may be more revealing of the small increase in average room rates, while inflation has increased.
"This means that to reduce costs, because there is no other way" the inn Wisconsin Irish "Green said." And the sad part, that means cutting hours or staff, because it is the largest expenditure in the hotel. "
Charles Sullivan, CEO of Milwaukee River Hilton Inn-Glendale, said that hotel operators monitor everything better.
"If in a crowded check-in is late afternoon, you get an employee in 3 hours and the other is 4," says Sullivan. "Every hour counts
nowadays. It 'really after a while'."
"The bone was left alone '
Although the costs will remain close, some hotels add services to maintain and attract visitors. Embassy Suites has recently added a free business center, including fax, copier and a computer.
"We try to facilitate the sale," said Drusco. "There is a small cake to bring new things to try."
None of which will ensure a positive bottom line, though.
To be profitable in a luxury hotel, the Wyndham's de Segonzac said, employment is the low to mid 70s. "
"It would be enough money for you to go back to something equivalent to what the owners would be, if ever the money in the bank," he said. But the capacity utilization in this area, only 60 percent of it. What is the gain is reduced and there is not much been cut. Most of them have already cut all the bones and fat left alone.
The city and the Brookfield market seems more competitive. Brookfield market has grown enormously since the Embassy Suites opened in 1987, Drusco said. Several new hotels also sprouted in recent years, making the total annual than 225,000 available nights Skyrocket to 705,000.
"And you know, the demand has not grown in proportion," he said. "Brookfield Not long ago two seasons - winter and construction hotel. There are currently living with all the problems.
Do not expect too much "problem" was built in the Milwaukee area any time soon.
The only hotel in the proposal by the boards of a 225-room Hyatt Regency Hotel, 333 W. Kilbourn Ave. Expansion, announced last month, Gary Grünau, Managing Partner of Mecca Associates Hotel, the Hyatt, part of a broader proposal to structure the contract to expand Milwaukee has.
"In light of these figures, there really is no hope that any new hotels built in 1995," said Hanis, Gregory, president of Hospitality Marketing Inc., a Waukesha hotel industry consultant.
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