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TR Mandigo & Company is a hotel consulting firm specializing in market feasibility studies, impact analysis, litigation support, asset management, financial analysis, and acquisition due-diligence for hotels, resorts, and F&B operations. Located in the Chicago area, we have conducted over 400 consulting projects around the globe. Our work has been cited in several publications; in addition, our insights can be found regularly on the business pages of the Chicago Tribune, Crain's Chicago, and other major media outlets.
New: Check out our interactive Recent and Proposed Hotel Map, illustrating the downtown Chicago pipeline.
Recent Blog Entries
Technology for Tough Times
By Alex Siegman
Posted on June 03, 2009 12:55 PM
tags:
The June 2009 edition of Lodging Magazine has an excellent article regarding technology investment during the current tough economy. I was fairly impressed with the article, as it's one of the first articles I've seen that have clearly mirrored my sentiments: technology is never a place to cut back.
Not to sound presumptuous, but it is my opinion that all well run technology departments should always have leaders in place that make the business process their number one concern. If technology isn't supporting the business process, it isn't worth investing in. In hotels, this comes two fold. You have back of the house operations such as property management and yield management systems, reservations systems, energy management, security, and other such systems as well as guest experience to worry about - wireless and wired Internet, a business center, TVs, iPod and iPhone compatible in-room devices, and so forth.
The Lodging Magazine article makes many good cases and presents several scenarios where current Chief Information Officers are spending their IT budget to streamline costs and boost revenue, all while considering the economic forecast and guest experience. It's well worth the read for any hotelier or technology professional, as this mentality should be something many businesses need to consider adopting in these times.
0 comments. Leave a comment.Quote in Monday's Trib
By Richard Mandigo
Posted on June 01, 2009 2:25 PM
tags: Quote Trends Press Recession
We've been quoted in an article in Monday's Chicago Tribune. The article talks about the opening of the Wit, but focuses on the effect that an influx of new hotel rooms has on a market already battered by the recession.
You can find the article here
0 comments. Leave a comment.Populism vs. The Hotel Industry
By Richard Mandigo
Posted on March 31, 2009 3:23 PM
tags:
March has been a bizarre moth, to say the least. We've seen extreme lows, the beginnings of recovery, and a million other things that no one has yet figured out. Is the worst over? In hotel terms, probably not, even if the economy only goes up from this point onward. Generally, the hotel industry is one of the first to suffer the down effects, and one of the last industries to recover. Almost everybody agrees that this year will be a write off, and several prominent consulting groups have revised their forecasts downward recently. With all that going on, what else could possibly be worth talking about?
For starters, STR released their February Market Data, showing a decline of 10% in occupancy and 7.8% in rate. Though these results are for the US as a whole, some markets suffered worse than others. Phoenix has taken the absolute worst of it, down 34.9% in RevPAR. The situation isn't good anywhere, really, but if you're looking for a bright side, it might be that some cities are a bit more insulated from the recession than the overall market. As should probably be expected, the luxury market took a beating (RevPAR down almost 30%!), while the economy market posted smaller declines. Will this mark a trend for hotel chains to again start focusing on downscale products?
Probably not. Hilton's newest brand is just the latest entry in the edgy-boutique-style-hotel category. When the W first came onto the scene, it raised a bunch of eyebrows. Now that everyone and their brother has a edgy, modern brand, the concept is beginning to lose some of its lustre. I mean, I get the concept, appeal to a younger crowd, charge more for what would otherwise be an upscale product, get people to see the hotel as a destination...it's admirable. Ironically, by trying to be so unique, they're starting to blend together.
Once you get past a a certain service level, hotels all basically offer the same amenities. Sure, maybe the soap's organic, or the sheets have a few hundred more threads per inch, but the name of the game becomes perceived value, as opposed to actual value. Is the guest going to pay an extra 50 to 100 dollars because the hotel is ultramodern and "cool"? Two years ago, the answer would have been a definite yes. Now it's a "maybe". It'll work in New York, or Miami, or a few other places, sure...but it sure won't work as well as it would have four years ago.
Speaking of four years ago, in 2005, we were one year out of the last major recession to cripple the hotel industry. The one that everyone was supposed to have learned all these important lessons about what to do the next time something earth shattering came along. One of the most important lessons was that deep discounting did not really help bring in more customers. With the start of this recession, we saw hotels react by initially being disciplined enough to remember to hold their rates. That lasted a few months, tops. We're back to a cycle of discounting by many hotels, or token rate increases of under 3%, in some cases. Ironically the one sector that has been holding its rates is the luxury sector, which is already the target of a bit more populist outrage than the brands would like. Luxury hotels used to be unique destination hotels. Now they're just another flag in a larger portfolio. So rather than target an individual hotel, it's easy to attack the whole industry. And related industries.
There's two ways to deal with populist outrage, one, you can address the complaints being leveled. Two, you can complain that the charges against you are unfair. The brands chose the latter. After all, they're a big important industry, and they didn't waste everyone's money like investment groups.
There's a few problems with the "whiny" approach. One, the hotel industry itself is NOT the target of populist outrage. The excesses of companies taking tax payer dollars and then spending them on luxury resorts did trigger public outrage, true, but the decline of the high end retreat is a self fulfilling prophecy from companies worried about public opinion. By whining about unfair treatment, the hotel industry has thrown its lot in with Wall Street.
Hotels have become a huge industry, serving a huge cross section of people. But, the hotel industry has been almost singularly focused on getting people to pay more for essentially the same service, and their approach has been to go "boutique". And it used to be just fine, because you could get a loan to build pretty much whatever you wanted.
But if luxury hotels are truly going out of style, a few editorials in the Wall Street Journal aren't going to change the inevitable. The hotel industry is not just the privilege of the rich. It serves a valuable role for commerce on a community level.
So why not look at this recession as an opportunity to focus on the mid-range or upscale brands, which have been virtually unchanged since the 90's. Why not build new brands (like the NYLO) that are budget conscious, while still delivering modern amenities. It's not impossible, and it's not even really that difficult. Heck, just focusing on modernizing brands would do a world of good.
0 comments. Leave a comment.Quote in Thursday's Trib
By Richard Mandigo
Posted on March 05, 2009 10:17 AM
tags: Conventions, Press Quotes, Chicago, Chicago Tribune
There's an article out in today's Chicago Tribune by Mike Hughlett about convention Business in which we've been quoted. The article makes the point that conventions are getting hammered by negative press. Consequently restaurants and hotels are taking a hit as well.
As we've said before, the upside is that Chicago is seen as a "serious" destination, and likely to be hit somewhat less hard than Vegas or Orlando.
0 comments. Leave a comment.Weekend Hotel News Round-Up
By Ted Mandigo
Posted on February 28, 2009 8:07 PM
tags: Hotel News
http://www.hotelnewsresource.com/article37328.html
Hotel News Resource (along with other sites), is reporting STR’s weekly results for the week of Feb. 21st, and they’re not pretty. Compared to last year, occupancy is down 11.6%, and ADR is down 7.2%. Last week, they were down 9.6% and 7.4%.
In Downtown Chicago February looks dismal, but January had a shot in the arm from a couple of citywides that resulted in an actual increase of 0.5% in number of room nights, above last year’s level. Occupancies dropped because of supply increases, and rates were also hit with packages, discounts and mid-winter promotions. It looks like about a 2 point drop in 2009 from 2008 levels (CBD only) with an 8 % drop in rates.
Suburban Chicago has seen the worst of it with 25% drops in RevPAR almost across the board. The airport was particularly hard hit, but that is in comparison with last year (08) when we had a strong January thanks to distressed passengers when all the east coast was hit by storms. We’ve been warning hotels not to drop their rates, because as soon as one hotel starts cutting prices, it’s pretty much a race to the bottom. As the recession drags on, keeping prices up seems like it’s going to be a very difficult goal.
http://www.hotelworldnetwork.com/economic-trends/q4-earnings-reports-show-hit-hotels
Hotel World Network has compiled the Q4 earnings reports from the top publicly traded hotel companies. In short, Intercontinental, Wyndham, Marriott, Accor, Choice and Starwood are all down. Hilton is privately held company, but if you thought Blackstone overpaid last year, well…
http://www.bizjournals.com/sanjose/stories/2009/02/23/daily79.html
Business Journal (From Hotel News Network) Hotel CEO’s have sent a letter to Congress urging them to stop criticizing hotel travel. It seems pretty unlikely that Congress is going to stop its populist streak any time soon, but the hotel industry obviously needs to give it the old college try. It’s a hard case to sell, since conferences just look bad. There are serious economic ramifications from the cancelling of so many meetings, but it seems to me they’re going about it the wrong way. Most meetings aren’t at luxury hotels, they’re in 3-star or lower convention hotels, and they’re regional meetings that basically have to take place. In addition, hotel CEOs should be framing their argument in a larger context. Luxury hotels are purposefully high end in services and amenities, but they make up a small percentage of the hotel business overall. Service jobs are a major component of the American economy as a whole, and blaming the hotel industry as being excessive amounts stating that a good third of the economy is frivolous, and that’s an argument that no one wants to make.
http://www.nytimes.com/2009/02/15/us/15vegas.html?ref=business
The New York Times has an article about the effects that the taboo on conventions is having on Las Vegas. Long story short, it’s bad. Unless you’re Chicago, because unlike Miami and Las Vegas, it’s not seen as a “fun” destination.
http://www.hotelnewsresource.com/article37318.html
Hotel News Resource has an article by Earnst & Young about ten industry trends which will shape the hotel industry in the coming year. They range from the obvious, such as “Debt” and “Cost” to the slightly-less-obvious, “alternatives” and “stimulus”. It’s definitely worth a read, and if you’ve got tons of time, you can download their 124-page 2009 lodging report which provides an extensive overview of the hotel industry.
http://www.usatoday.com/travel/columnist/grossman/2009-02-24-ten-travel-trends_N.htm?csp=34
USA Today’s David Grossman has another top 10 list of trends, though some items, like the “Resurgence of Internet Fares” aren’t going to be as major as he thinks, because unlike the 2001 recession where deep online discounting hurt the bottom line of the travel industry, these websites have been brought into the fold, and hotels know how to account for them.
What’s happening with E-marketing? Several prominent bloggers have a roundtable to discuss what’s next.
http://www.hotelchatter.com/....Which_Trendy_New_Budget_Brand_is_the_Best_
Hotel Chatter asks the question we’ve been wondering for a while. Which trendy new budget brand is the best? Hotel Chatter loves NYLO, but it’s only one of a handful of brands, most of which are out of place anywhere other than an urban market. We’ve got our opinions. What do you think?
0 comments. Leave a comment.
