Every once in a while a friend shares something funny and brilliant by e-mail. Today, Tiffany Cooper, my dear friend and colleague from the real estate group at Starwood Hotels dropped this into my inbox and I felt compelled to share it with you all.

Please enjoy How the Grinch Stole Business, by Tiffany Cooper:

Every Hotelier down in Hotelville liked Business a lot.
But the Grinch, who lived North of Hotelville did NOT.
The Grinch hated Business! The whole peak season!
Now, please don’t ask why, no one quite knows the reason.
It could be that his head wasn’t screwed on quite right.
It could be, perhaps, that his lapels were too tight.
But I think that the most likely reason of all,
May have been that his own hotel portfolio was two sizes too small.

But, whatever the reason – his brain or his lapels,
He stood there, illogically hating the hotels,
Staring down from his un-Heavenly bed with a frown,
At the beautiful-lit properties below in their town.
For he knew every Hotelier down in Hotelville beneath,
Were busy now setting their Best Rate Guarantees.
I must stop Business from coming…but how?”

Then he got an idea – an awful idea,
THE GRINCH GOT A WONDERFUL, AWFUL IDEA!
“I will freeze the market, no financing = no deals!
No new construction to be had, that is sure to make them reel!
No new alofts, no Ws, no Sheratons – not one!
With no money to build, Hoteliers will have no more fun!”

And all the Hoteliers, in their Sweet Sleepers asleep,
Had no clue the Grinch had such a tight hold on the Street.
“They’re finding out now that no hotels will be built!
They’re just waking up! Oh my – what a jilt!
Their mouths will hang open a minute or two,
Then the Hoteliers in Hotelville will all cry BOO-HOO!”
“That’s a noise,” grinned the Grinch,
“That I simply must hear!”
So he paused, and the Grinch put a hand to his ear.

And he did hear a sound rising over the snow.
It started in low, then it started to grow…
But the sound wasn’t sad? How could it be so?!

He stared down at Hotelville, the Grinch popping his eyes,
For what he then saw was a shocking surprise!

“We’ll CONVERT,” they all said, “We’ll build up our Brands!”
We’ll PIP those independents that are in need of a hand!
We’ll sharpen our pencils, focus on the right things,
We’ll use this down time to plan and own the upswing!”

He hadn’t stopped Business from coming – it came,
Granted new development was slower, but it came just the same!
And the Grinch, with his Grinch-feet ice-cold in the snow,
Stood puzzling and puzzling: “How could it be so?
It came with White Tea. With Whatever/Whenever too!
It came with ReFuel, The Link and Best Brews!”

And he puzzled three hours, `till his puzzler was sore.
Then the Grinch thought of something he hadn’t before.
“Maybe Business,” he thought, “doesn’t come from a bank.
“Maybe Business, perhaps, comes from a clever think-tank.”

And what happened then?
Well, in Hotelville they say,
That the Grinch’s own portfolio,
Grew three sizes that day!
He acquired a brand that wanted to sell,
Then opened the market with a ring of the bell,
“Debt financing is back – it’s time to grow, grow, grow, grow!
Commission those studies, get to work on FiMos!”

And back came the market, no more Hotelier’s lament,
And he, himself – the Grinch – broke ground on his very first element.
- – - – - – - – - -
May your holidays be filled with joy and love; and may 2010 return us all to a time of opportunity.

–Mark Heisler

Hotel Amenities: Wi-Fi, Plush Linens, Minibar, and ROCK STAR CHEF?

For lack of a better term – I am a “foodie.” I mean, who isn’t nowadays.  Thanks to the success of Top Chef, Hell’s Kitchen, and the like, every Mac-N-Cheese eating, sugar cookie burning schmuck is ranting and raving about the stylistic approach to sous-vide cooking, idolizing celeb chefs like rock stars, and detailing the complexities of pork belly and bone marrow.  (With that said, if you are yet to taste either the belly or marrow, you have my sympathy.)

However, a great restaurant does more than just serve up good food, delivering a certain level of shock-and-awe, mesmerizing the guest and making them come back for more.  Hmmm, sounds a lot like what a great hotel is supposed to do, right?  For that reason, hotel restaurants are no longer a by-product of the hotel itself, but instead, a leading demand generator and a hotel marketers dream.

I didn’t realize the marketing power of a great hotel restaurant until I spent time working at a Relais and Chateaux resort and restaurant in the British Virgin Islands. Relais and Chateaux is a collection of the finest resorts (see The Point, The Inn at Little Washington) and restaurants (French Laundry, Daniel, Per Se) in the world. Point is, I couldn’t believe the pull our restaurant had on bringing in guests.  And while some guest surveys touched on the rooms or service, almost all applauded the restaurant.

Of course, on the other hand, if a guest has a poor dining experience at the restaurant, the front desk is bound to hear about it.  Even in the likely scenario where the restaurant is a leased space/separate entity, a hotel guest views them as one. That being the case, shouldn’t hoteliers equip their property with the best restaurant possible?

The partnership of fine dining and luxury hotels isn’t new.  But years after Jean-Georges moved into Trump in NYC and Wolfgang Puck hit Vegas with Spago at Caesar’s, the explosion is officially upon us.  Just look at the recently opened Aria in Las Vegas’ City Center, boasting a practical who’s who of culinary artists.  With restaurants by Julian Serrano, Jean-Georges Vongeritchen, Michael Mina, and Masayoshi Takayama, Aria drew in a constellation of Michelin stars.  Is this enough to put heads in beds? This “foodie” has been on the horn booking my Aria suite for Spring 2010.

-Mike Kitchen

I’m So Confused!

OK, which one is it? In the same day that the Sahara announces it is closing towers for the slower winter months as reported in the Las Vegas Review-Journal here comes an article by GlobeSt.com highlighting increasing room rates in the valley just as the giant City Center complex opens and adds more than six thousand rooms to an already soft market.  Professor Fred Gottheil at the University of Illinois explained supply and demand to me in his Econ 101 lecture many years ago and these conflicting announcements seem to contradict everything he taught me.

Really. I’m so confused.

–Mark Heisler

aloft and element

Look for some focus on brands from PLA over the next few months, but a couple comments on my first stay at an aloft and some thoughts on it’s Starwood sibling element.

First, note to management, if you can find a better way to fertilize your landscaping area right outside the front door other than manure, please avoid the manure.  That is simply a disgusting smell to have to experience walking in and out of your hotel.  Second, I have to say I think Starwood dropped a couple balls here.  From seeing the demo room years ago, that 18 inch deep closet in the bathroom area is too small and just awkward.  Has to be a better way to lay the room out.  The rest of the room gave me what I needed, comfortable bed, good shower, typical Starwood staples.

Based on what the real sell was all along though, the lobby experience just felt weird.  It was one thing walking into a W, the Delano, Mondrian etc. in the 90’s and thinking (hoping) you may bump into Cindy Crawford, Christy Turlington or Helena Christenson at the hotel bar (I have to use the 90’s as a reference point as I simply can’t stomach the thought that anybody may hope to bump into Lindsay Lohan, Paris Hilton or any Kardashian anywhere.  However, it seems everyone bought into the bull.  With 3o something W’s in the World, somehow now there is room for hundreds of alofts, which seems dependent on some of the same demographics as that of the W’s and their independent counterparts.  For me, I can tell you I will not ever be very interested in spending much time with 7 suits drinking beer and playing pool, which was the extent of the action in the “bar” in the aloft for 2 consecutive nights.  The most comfortable part of the lobby area of the hotel is the 24 hour F&B area, and you can now get that same type of experience at many different select service properties.  So in a nutshell, the success of W does not warrant aloft, and they are too close in their baby W concept, or “DNA” to now suggest they are targeting much of a different crowd, one that is looking for some fun, but still convenience and comfort.

On the other hand, although I have not stayed at an element yet, I am hearing that they are performing better than the aloft assets, even with much less distribution, it has the “DNA” of Westin, a much more proven brand, and seems to make much more sense to be staying in the “Westin” in a market that would otherwise not have a Westin, simply because the development of a new upper upscale full service asset could not be warranted.

Details magazine recently did a one page piece on High-End Extended-Stay Hotels in it’s December 2009 issue, and right there along with AKA Hotels http://www.hotelaka.com/ and a couple of single asset independent hotels is element in it’s glory.  So seems that while using the “DNA” of Westin, element may just be getting the attention, and maybe even the target market that aloft was supposed to.

Good luck Starwood, you are a great marketing company, I am a big fan of your SPG program and most of your brands.  I stay often and hoped to be really impressed with aloft.  As of now though it is closer to my appreciation for Four Points by Sheraton as it is for Sheraton.  And one last thought on Four Points, while you were at it with the DNA concept, since everyone has been so confused about what Four Points is for so long, why not have simply dropped the F&B and converted it to a limited service brand with the “DNA” of Sheraton?  Then you could have been in ALL the important segments, and you could have likely had a brand that would cost 75% of an aloft and able to generate 90%-95% of the rate when times are good, and far more likely to generate business when times are lousy.

Anyway, there you go, as they say, “You have a long way to go baby,” W that is.

- Beider

The Good People – 1

I just left the funeral of a wonderful man, and a couple things stuck out as I drove up, listened and drove away. First, this was the same funeral home where we had the service for my father’s funeral almost 20 years ago. This alone has brought up a little more emotion than I anticipated today, but yet more important, the quality of these people.

I have spoken often lately about my issues with people who work in poor faith, and unfortunately, there is a lot of that around. But today I was reminded of how easy it is to do the opposite, act in good faith, do the right thing and be a good person.

The differences between the cousin by marriage of the funeral I attended today and that of my father I think are significant, they worked different types of jobs, seems desired different types of careers, but both were good people.

My father was a hotelier, and while a good and shrewd businessman, he took care of people. He wanted to teach and help others succeed. He also strove for success but not at the expense of others. If you know me, ask me about him, I’d enjoy telling you what I remember, and how he helped me become me.

Today I attended the funeral of another family man. He was a businessman, but always put family and friends first, and cared for all beings. A quick story was told of him visiting his daughter whose dog had stopped eating recently. The next morning they found this man laying on the floor handfeeding the dog.

What does this have to do with lodging. Nothing. But it does have to do with being a good person and doing the right thing. I have been blessed to be around people like my father, who I unfortunately did not have in my life the past 20 years, and people who I maybe see once a year, like the gentleman who was mourned today. I will continue to try to surround myself with good people. If it means less deals, less fees, less recognition, so be it. Life is far more important than a dollar or many dollars. But if you want my help, and you can simply be good in return, give me a call, I’ll work my ass off for you.

- Beider

The Blog

I was so upset last week when I lost my long blog post due to my spinning Mac wheel.  So I was thinking what is a blog, why am I writing enough to get frustrated when I lose it?  Isn’t the definition of a blog something that shows the personality of the party or company, as a sort of online journal, where there are numerous posts.  Can be multiple posts each day, all short.  So what I am going to try to focus on from now on, at least on my day for blogging responsibility.  I want to post something short about several different topics, and here is what I am going to focus on.

1. The Hotel industry (obviously).  Can be an unrelated article, but tied to the industry by our musings, etc.

2. Our new philanthropic program.  We have decided as a company to work harder on giving back more to the community.  This will initially be very much focused also on health and exercise, as 4 team members in the Chicago office have committed to doing several workout programs during the winter, and then train for the Chicago Triathlon, Chicago Marathon and any other events.  We will set up something that allows us to raise money for causes important to us.  Of course ITK, which I am on the Board of Directors of, but also some others as well that are important to others in our group.

3. Something on a focus of mine lately.  Ethics.  Working in Good Faith.  Being a good person (or business person).

4. Maybe a surprise entry, something about baseball?  Maybe music?  Who knows.  Try to tie it to lodging of course.

So there you have it.  Will I do 4 new posts today, or use this as my launching pad and start next week Monday.  Will others follow suit?  We’ll see, but we plan to take this blog to big places.  Not sure what that means, but I imagine that we hope lots of people read it on a daily basis.

Have a wonderful Monday.

- Daniel Beider

Miracle of Miracles

For many months now the hotel industry has been trying to convince itself that we will be saved by some sort of extra-economic miracle.  If we only invest more money as an industry we will be saved.  If only people would start traveling again we will be saved.  If only….  go ahead, you fill in the blanks.  We’ve heard it, and perhaps said it, over and over again at one industry gathering after another.  We’ve been trying to remain upbeat, optimistic, positive; and at the same time we’ve been cutting expenses, reducing head count, putting off capital expenditures, and dropping our pants on rate while at the same time hoping our competitors won’t follow suit.  In short, we’re waiting for a miracle.

Last Friday night at sundown Jews all over the world dusted off their Chanukah Menorahs and lit the first Chanukah candle.  The Festival of Chanukah has its origins in a battle between those who would seek to modernize their faith to the point of oblivion and those who would fight to the death to maintain the status quo, set against a backdrop of tyranny and oppression.  The Chanukah Menorah symbolizes the miracle we were taught as kids happened at the end of the war:  that one small vial of oil burned for eight days.  As adults we come to understand that this miracle was the ancient Rabbis’ way of injecting God into a story that is mostly Godless.

Similarly, on December 25th (or thereabouts in some other cultures) Christians commemorate the birth of a child born of a miraculous conception and who went on to perform countless miracles, accounts of which would both unify and divide much of the western world for the next 2000 years.  To modern children, the purely religious aspects of Christmas are enhanced by a visit to their home by the Good St. Nicholas, Santa Claus, or another character who rewards good behavior with gifts.  To many, this is nothing short of a miracle.

There are many other religious traditions for whom an important holiday has recently occurred or will soon be occurring; and during which a great many miracles are commemorated.  In our culture and tradition, like many others around the world, miracles equate to hope.

So, is there a miracle on the horizon for those of us who make our living in this crazy, cyclical, exhilarating, exhausting business of providing hospitality?  I think not.  I believe that we have to work our way out.  Santa Claus will not be dropping gifts of rebounding RevPAR down any of our chimneys.  The light of the Chanukah Menorah is not the light at the end of the proverbial tunnel.  We have been hearing for a year that there are investment funds of billions of dollars sitting on the sidelines, keeping their powder dry, waiting for the right opportunity to pounce on distressed assets as soon as someone decrees that we have hit the absolute bottom of the cycle.  In my opinion, by the time someone calls out “bottom” we will already have bounced out of it and be on our way back up the curve toward the next dizzying peak.  Who will lead the way?  Who will be bold enough to begin buying assets, conveying the message to the marketplace that now is the time?  And most importantly, who will be there providing leverage to these transactions with the debt that has been missing from our industry for more than two years?

These are not meant to be rhetorical questions but rather starting points in a discussion.  Send me an email or post a comment.  I’m interested in your thoughts and will share them in future blog posts.  After all, we are still looking for a miracle.

–Mark Heisler

Greed

It seems like every time I want/need to write something for anything lately it has something to do with how greed is so predominant in our society. While I continue to research to write an article that studies the fine line between illegal business activity and heavy fee driven or other questionable business activities, I am noticing that greed, while many have said was a driving force during the several past years of excess, I am realizing is just a much a part of the current environment of distress.  From business deals where bad faith is shown to my experience just a few minutes ago.  Outside of a Starbucks a gentleman who suggested he was homeless asked if I had any money I could give him for something to eat.  As I checked my wallet and noticed I had no singles, he must have been able to glance in and suggested that I could give him $20.  I kindly apologized and said I could not do that, reached into my pocket and found a few quarters offering them to him, essentially 75% of what I would expect most people would “donate” if at all.  He looked at me with a level of disappointment as if I just stole from him, and I realized, as fortunate as I am and as unfortunate as he is, it remains something that is akin to greed, or entitlement, or something that I just don’t understand.

I bet that there are plenty of real estate developers and owners that if they were offered 75% of what they once thought their investments were worth they would be quite content.

-Daniel Beider

Three Hotel Developers Walk Into a Bank…

The first developer walks in, cosmetically weathered and slowed by a cane but very bold and outright in character.  In a stern, almost demanding voice, he says to the banker,

“I need $300 million to continue the development of the Cotai Strip, the Vegas of the East, in which I brought to fruition.  I already secured $1.45 billion and my existing Macanese casino, the largest in the world might I add, is just the beginning of what is to be. Do not fret about my ability to pay the loan back, our company anticipates raising $3.83 billion with our IPO on the Hong Kong Stock Exchange.”

The banker reviews his materials and responds, “I understand the upside but there is simply too much risk.  You currently have $12 billion in debt due over the next 18 months. Your debt to EBITA ratio is 5.78:1, which will soon exceed a declining ceiling on such debt levels.  You have $5 billion invested in your Singapore project, which is yet to open. Your corporate stock has been the most turbulent on the market in recent years; same is true of your personal wealth. And the Hong Kong IPO? All but $500 million of the assumed $3.83 billion will go towards serving existing debt and incorporate loans.  No thank you!”

The next developer walks in like he owns the place. With his distinct comb over and squinted eyes, he approaches the banker and brashly demands, “I need a loan for new investment opportunity in a hotel and conference center near Santiago, Chile.  The overall cost will be between $15 and $20 million.  Give me the construction loan and I’ll pay it back immediately upon completion. After all, I always come out on top.”

The banker responds, “Maybe that’s true but I’m afraid this time you may have bit off more than you can chew.  I noticed you filed for Chapter 11 bankruptcy in February on your three properties in Atlantic City, all of which have seen revenue declines exceeding 11% this year.  Your projects in Soho and Waikiki are months past their original schedule opening and couldn’t be coming in at a worse time.  And your vacant skyscraper camouflaged into the Chicago night’s sky?  I don’t think you will be able to defer payments on the $650 million loan for much longer.”

The last developer walks into the bank with an aura that can’t be ignored.  With a bright white smile, he approached the banker, but before he has a chance to speak, the banker interrupts.

“Wow, what a breath of fresh air; you’re balance sheet is outstanding.  Despite slipping revenues, you were able to circumvent major losses with great operating efficiency.  You have outperformed the competition in Macau and Las Vegas.  Your IPO in Hong Kong was very well received, raising $1.8 billion, which in turn, boasted the share price of your U.S. stock.  Your investors will receive a special $4 dividend per share this quarter and quarterly dividends going forward.  And it appears that your follow up project in Macau is already financed for $6 billion, of which, only $3.5 billion has been implemented.  So tell me, what can I do for you?”

The developer smiles at the banker and say, “Nothing. Sometimes I just like to tout when I Wynn.”

-Michael Kitchen

Let’s Go Bowling?

This past Saturday was rough for me.  All I could do was sit back in utter disbelief as I watched my starting quarterback, and BSC title hopes, vanish in the 12 seconds or so it took to run one lousy broken play.  With my Iowa Hawkeyes at 9 – 1, we are well positioned to be selected for some sort of January bowl however which one now remains to be seen.  In two of the last four Iowa postseasons I’ve made the trip to follow my beloved team into unfamiliar territory as part of a sea of black and gold converging on Florida each of the years I traveled.  Back then it seemed like a forgone conclusion that as long as the selection was in a warm climate a New Year’s trip would be made.  However in light of how difficult the hotel real estate advisory business has been in recent times, as well as in so many other sectors of our industry, this year’s travel plans aren’t anything if not completely tentative.

The thought of tying college football into our hotel related blog crossed my mind this morning while perusing through the USA Today.  An article discussing the increases in college football head coaching salaries despite the troubling economic times perplexed me.  I found one quoted statistic especially staggering, “USA TODAY’s latest study of compensation reveals that Tedford (California)  is one of at least 25 college head football coaches making $2 million or more this season, slightly more than double the number two years ago. The average pay for a head coach in the NCAA’s top-level, 120-school Football Bowl Subdivision is up 28% in that time and up 46% in three years, to $1.36 million.”  College head coaching salaries are up 46% in three years?!?!  To me that’s amazing.  Especially when you smear that across the backdrop of a nation who has for all intents and purposes been in a recession/depression for half of that time period.

Sadly my interest in this article quickly faded and I moved on to thumb through stories in the Travel section.  Much to my dismay I was greeted with the headline “Hotel rates down 8.8% in 2009, decline forecast for next year too.”  Awesome.  Trying not to be cynical here and for the sake of comedy and to draw a ridiculous correlation; the only people affluent enough to book travel and follow their teams to a bowl game this year are the head coaches!  Clearly I’m kidding but it will be interesting to see how many fans do chose to spend discretionary income on that type of travel this season.

As for me I’ll likely pass, unless we somehow fight our way into the Rose Bowl, but as an Iowa fan I’ve learned put reality in front of ridiculousness.

- Adam Montufar