Lodging industry looks at downturn

Date: August 21 2008
Source: commercialappeal.com
Website: http://www.commercialappeal.com/news/2008/aug/21/lodging-industry-looks-at-downturn/

Since it left its "soup to nuts" days behind and concentrated on its luxury-hotel brand, Nashville-based Gaylord Entertainment Co. has enjoyed the sort of bonanza that makes it the envy of a sagging lodging industry.

Having divested itself of revenue-draining assets that included professional sports teams and cable TV networks, Gaylord focused its attention on the rebranded Gaylord Opryland Resort & Convention Center and new resort properties in the Orlando, Dallas and Washington areas.

Since then, Gaylord Hotels' cash flow has rocketed from $52.9 million in 2002 to an estimated $204.5 million this year with $1 billion in revenue.

Speaking to local hotel owners and operators at Wednesday's sixth annual Memphis Lodging Industry Summit at the Cook Convention Center, Gaylord president and chief executive officer Colin Reed explained why hotels that cater to their customers' every need are succeeding in a tough market -- and why those that don't will likely continue to struggle.

Reed cited escalating building costs, capital market problems, inflationary pressure and a lack of airline profitability as the key issues facing the hospitality industry.

"The business environment is awful," he said.

Because of that, "middle-of-the-road brands will have a tough time the next 18 to 24 months," but "good brands should come through this. The next two to four years will be a great opportunity for good brands."

Statistics gathered by Hendersonville, Tenn.-based Smith Travel Research appear to back that up.

In Memphis alone, demand for rooms in luxury properties is up 0.7 percent from a year ago, while demand at midrange hotels without food and beverage service is down 13.1 percent.