Redesigning Hotel Rooms

The recession has had some impact in the leisure and travel aspects of hotels. This has lower the hotels' income, which has prevented several hotels from coming up with new design projects. There are, however, some hotels that seem to be doing well enough to invest in redesigning their rooms. One of them is Starwood Hotels and Resorts. It plans to redesign some of the guest rooms. Out of the 576 worldwide hotels, it only plans redesign 41 of them. The reason for this is because it takes a lot of money to redesign just one hotel. With the 41 hotel Starwood is estimating to spend over $100 million. Starwood is a big hotel chain, which is why it is able to afford the costs.

Franchised or managed hotels are not able to keep up with the new designs because the ones that pay for the designs are the owners and not the management companies. The lack of income means that this hotels have can't afford to change the look of the hotel. A study shows that hotel spending on new looks has gone down in the last couple of years. The lack of renovation has become apparent; it has come down to, “scuffed wall coverings in hallways to torn drapes and faded, worn and stained carpeting and upholstery.” Hotels that are able to work on making themselves look better have the advantage of being more appealing to guests.

Hotels that are being affected by the economy have to do something that will give them an advantage over the new and improved hotels. What these hotels can do is maybe lower the prices of the rooms or provide a service that will cost them very little, but will greatly satisfy the guests. The improvements of the hotels will be attractive to people, but it might also make the prices of the rooms go up in order to compensate for the expense of remodeling. This will then leave people with choosing to stay at a cheap, not so attractive hotel and room or to stay at a more expensive, but better looking hotel and room.

http://www.nytimes.com/2010/10/12/business/12hotels.html?scp=1&sq=hotel%20industry&st=cse

Blackstone Reclaims Old Property

Blackstone Group LP, the world's largest buyout firm, has pounced on the chance to make big money off of the recession. Blackstone has $100 billion worth of assets under managment, including Hilton Worldwide, Inc. The firm has now seeks to buy back properties it sold at peak value for a bargain. Blackstone has already captured Extended Hotels, Inc. along with its 680 hotels, which it sold for $8 billion in 2007, for a price of $3.9 billion. Now the firm has its eyes set on 14 hotel properties owned by Columbia Sussex. These same 14 properties were sold to Columbia Sussex for $1.4 billion in 2006. Blackstone now looks to regain these properties at the extremely discounted rate of $300 million. Columbia Sussex had invested $170.6 million to turn 13 out of the 14 properties into top-tier brand hotels.

I believe Blackstone Group has done the right job as they pick up the ripe treats before them. The hotel industry is continuing its recovery as occupancy and revenue rates continue to increase. For Blackstone to hold these major properties at the discounted rates now could promise them a very optimistic return in the future as they have already worked with these properties and seen their growth potential. In buying out their old properties, Blackstone also eliminates the fear of dabbling in unknown waters. The odds are that they will eventually capitilaze on their expenditures and I think that they are very aware of that.


http://online.wsj.com/article/SB10001424052748704164004575548390559325962.html?mod=WSJ_Hospitality_leftHeadlines

Marriot Swings to Profit as Revenue Rises- Jesse Binder

Marriot generated more than a $500 million improvement in profits during the third quarter, led by the absence of last year’s $502 million write-down and a 7.5% increase in RevPAR(revenue per available room). The increase in RevPAR partly reflects a 1.8% increase in the average daily room rate as well as higher occupancy factors. In fact, this was the first time in two years that Marriot’s North American average daily room rates actually rose compared to a year ago. For the third quarter, the hotel reported earnings of $83 million, or 22 cents a share, compared with a net loss of $466 million, or $1.31 a share, a year earlier. Revenue rose 7.2% to $2.65 billion. The company’s profits have been helped by the increase in demand for corporate and leisure travel and a limited increase in the supply of hotel rooms. Marriot’s profit improvement has also been boosted by the expansion of its hotels outside North America, which management believes will account for a growing percentage of its future revenues and earnings.


Marriot projects fourth quarter earnings per share of 33 cents to 36 cents. The organization also estimates 6% to 8% growth in revenue per available room, or revpar, a key performance metric for hotels. Hotel companies are very dependent on the health of the economy, consumer spending, and business confidence. Due to the improving economic trends, strong economic growth in the emerging markets, and limited growth in the supply of new hotels, I believe Marriot hotels will report strong results in the fourth quarter and in 2011.


http://online.wsj.com/article/SB10001424052748703735804575536632272217678.html?mod=WSJ_Hospitality_leftHeadlines

Upper Class and fast food-Kyle Davis

A recent American express study has shown that the “ultra-affluent” consumers have increased their spending on fast-food by 24%. Ultra-affluent is defined as someone who charges 7000 a month on their card and meet certain income requirements. These consumers have also increased their fine dining expense but are still showing signs of saving money. This agrees with how the economy is doing. The economy is recovering but still is bad which means people are becoming better off financially but not to a large degree.

"Subconsciously, I think I'm saving money by spending less on food, but my spending somewhere else must be going up, because the amount on my credit card is not going down”

Fast-food is the only portion of the restaurant industry which has seen increases during the recession. I think its interesting that even the upper class are subconsciously reducing their spending in aspects of their lives. The article brings up the point that their luxury spending is increasing on things like plane tickets and luxury hotels but they still have increased their spending on fast-food and retail shopping. Its interesting that this increase in lower end expenses makes the upper class consumers feel as thought they are watching and limiting their spending.

http://online.wsj.com/article/SB10001424052748703431604575522080669507478.html?KEYWORDS=fast+food

San Francisco Foodshed Project

As farmers continue to struggle with increasing domestic and worldwide competition; a group of non-profits and businesses have initiated a project in the San Francisco Bay Area. They have set up a chain where farmers' harvests would be picked up by Ben and Annie Ratto, acting as middle men between farmers and food distributers. These distributers include L.A. Specialty Produce Co.'s San Francisco branch and FreshPoint Inc. The distributers then sell these products to customers in the area. Since July of this year the project has aimed to tighten the often complicated relationship between local farmers and final commercial customers. One of the best known names associated with this project s the Ritz-Carlton hotel chain.

Although this seems like good step towards helping out local farms, the system still has major flaws. Ritz-Carlton chef Nate Beriau is a strong supporter of the project, yet he claims that "It takes patience," referring to the need to maintain a standing order for the fruits and vegetables instead of making ordering according to the specific needs of that day. Other worries include the fact that this system cannot guarantee that products will be similar size of shape, which is a concern to restaurants that want to keep their signature products the same.

I think that with a few logistic adjustments and the experience that will come with time, this project will really take off. It solves the hurdles that farmers have to go through in famers' markets and such. It also helps the fast-paced food industry to find all their needs under one roof that is known for its quality.


http://online.wsj.com/article/SB10001424052748703946504575470212852902950.html?KEYWORDS=hotel+supply+chain

Human Resource Practices (Irma Mendez)

Marriott Hotels are a major chain of hotels that has been around for a long time. One of the reasons why the hotels have had such success is the human resource practices that they have. J. Willard Marriott, the founder of the chain, made sure that every employee felt valued in their job. He would take the time to ask his employees about their specific problems at work. He also told the managers that they were responsible for the satisfaction of their subordinates because in order to complete your work with a good attitude, you need to feel comfortable in your job.
Marriott's human resource practices include: “manpower planning, recruitment and selection; training and development, employee retention and welfare initiatives.” What manpower planning means is that each division or department of each hotel makes an expansion planning. They look at the number of workers, jobs, and positions needed if the hotel grows to a certain level. This helps them see how many workers they are going to need to hire and the type of they training they will need to offer. This type of planning helps them be prepared for any expansion or change that the hotel might encounter. Training and recruitment is another important aspect. After having hired a new person to become part of the hotel, that person needs training so that they know exactly what to do. Marriott has several training programs that have gotten better over the years. Marriott spends a big part of its money on training its employees, therefore it is important to keep them. In order to do so, Marriott provides services that helps the employees not get stressed out and balance work with personal life. In 2000 it started a new program called Management Flexibility. This program was started after several managers quit because the hotel was taking too much of their time. The program's goal was to help its employees not feel like their work was taking over.
The human resource practices of a hotel or any workplace are vital to the organization of the place and the way employees feel about their work. I think that it is very important for any workplace to take into consideration the needs of its workers. If a worker feels appreciated, then he or she will perform his or her job better. Choosing the right people and training them well will definitely make the hotel run better. Also being prepared for what might happen has the the potential to help a business(hotel) grow.
http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20Organization%20Behavior/Human%20Resource%20Management-Best%20Practices-Marriott%20International-Case%20Studies1.htm

Burger Kings New CEO- Jesse Binder

3G Capital, the new owner of Burger King plans to restructure the burger joint management team through the hiring of CEO Bernardo Hees who will succeed Burger King's current Chief Executive Officer, John Chidsey. Bernardo Hees was previously the CEO of America Latina Logistica, Latin America's largest railroad and logistics company. He successfully implemented various strategies to boost company profits for the railroad and logistics company. Burger King’s sales and profits have been hard hit by the impact of the high unemployment rate of its targeted market of young customers. Analysts who follow Burger King hope that Bernardo Hees will be able to leverage his skills to the fast-food industry. Burger King’s international sales have been lagging behind its main competitor McDonalds. By bringing in the new CEO, Burger King hopes that new operator will show great leadership, discipline and innovation to help the burger company to surpass their key adversaries such as McDonalds and Wendy's.

Bernardo Hees will have to fill the shoes of some stronger CEOs who have previously run Burger King.   Burger King has had CEO's such as John Dasburg, Greg Brenneman, and John Chidsey who brought knowledge and experience to the company.  However, the former CEO's were unable to elevate Burger King’s market share and financial performance to a level near McDonalds, the industry’s powerhouse. I believe Bernardo Hees will enforce a new type of strategy and leadership into Burger King.   He not only brings strong leadership skills but also was previously the Chief Financial Officer of the Brazilian railroad and logistics company.  In my opinion he will focus on customer satisfaction, distributing better products to its consumers, and instilling more aggressive marketing and financing tactics to ensure that Burger King is able to improve its competitive standing in the fast food industry.

http://online.wsj.com/article/SB10001424052748703960004575481482827393778.html?KEYWORDS=emerging+hotels