HB ON THE SCENE: Lodging Conference Continues With Concern Over Security, Customer Satisfaction and Franchise Consistency

PHOENIX – The upbeat mood at the Lodging Conference 2004 continued for the second day as hoteliers agreed that the industry has returned to business levels of 1999 and 2000. However, a number of issues still impact the lodging business’ future, including gas prices, the economy, the continued threat of terrorism, third-party distribution channels, and rising guest demands. “Everybody is conducting studies on what guests want, but what are they willing to pay for is the problem,” said Thomas Higgins, former president and CEO of Best Western International Inc. “We have to create an experience for today’s more demanding customers by differentiating our products, enhancing service and value, and making our guests more loyal, added Trudy Rautio, president of Carlson Hotels, The Americas, Carlson Hotels Worldwide. Joe Kane, President and CEO, Days Inn Worldwide, Inc. said that training costs for hotel leaders of tomorrow must continue to be a top priority and that more hoteliers should join major lodging associations that focus on training , “not just at the property level, but all routes of the lodging industry.” On the topic of hotel safety and homeland security, hoteliers agreed that they are taking much better precautions today than four or five years ago to make guests feel safer. Kyle Edwards, Vice President Corporate Security and Gaming Surveilance, MGM Mirage, Inc., said his company conducts background checks of both employees and outside vendors, especially at his hotels in Las Vegas that deal with the highly involved gaming industry. Steve Joyce, Marriott International’s EVP, Owner and Franchises Services, said guests feel more secure and safe with security personnel wearing uniforms instead of non-descript blazers and slacks. Nelson Migdal, co-chair, National Hospitality Industry Group, Holland & Knight, LLP, added that a major security flaw at even the most upscale hotels includes easy break-ins into guest room keyed safes. Discussing the biggest frustrations within the economy hotel sector was David Mumford, president of The Mumford Company, saying: “There’s too much push and pull for brand consistency, not just among big city franchises, but all franchises to include the same amenities.” Days Inns’ Joe Kane added that “you don’t have to look like every property in the system, it just depends whether you’re in a prime, secondary or tertiary market.” “Because we are a system that owns, operates and franchises chain hotels, the guest experience should still be seamless, so we must have total cooperation from our franchisees,” said Alan Tallis, executive vice president, chief development officer, La Quinta Corporation. Regarding real estate trends, the number of U.S. lodging transactions on the appraisal side for the first six months of 2004 reached $2.4 billion compared to $1.6 billion registered in 2003 , said Greg Hartmann, managing director, HVS International. “It’s mainly been a seller’s market with low cap rates and low interest rates that are beginning to climb. A lot of hotels have been financed through public means, but not with much new development.” Pat Ford, president, Lodging Econometrics agreed, saying that the new construction pipeline peaked in the third quarter of 1998 before bottoming out in fourth quarter 2003. In discussing mixed-use developments, “it’s the retail and residential side driving mixed use, and not hotels, which usually comes in the second and third phase of a mixed-use development,” said Bob Mannon, senior vice president, Lodging Development, Marriott International. Paul Courtnell, Jr, senior partner at The Leisure & Resorts Group, said planning of amenities at a mixed-use development must be strategic. “A hotel brand doesn’t necessarily sell real estate at a mixed use development. ” ####