|By Ryan Frank, The Oregonian, Portland,
Ore.McClatchy-Tribune Regional News
September 2, 2009 --Hilton's decision to shutter its original 23-story building for four weeks this winter frames a grim picture for a hotel industry battling corporate travel cuts and consumers' belt-tightening.
Hilton's original 1963 building is a local icon of the travel industry. The hotel has provided temporary shelter for famous faces from George W. Bush to former South Korean president Kim Dae-jung to boxer Muhammad Ali to celebrity sex doctor Dr. Ruth.
But for two weeks in November and one week each in December and January, the Hilton's presidential suite -- along with all other rooms in that building -- will go dark.
Tracy Marks, the Hilton's general manager, couldn't be reached for comment Wednesday. But hotel executives told union leaders in August that the building at 921 S.W. Sixth Ave. would be shut down to cut costs. The Hilton's Executive Tower, which sits across Sixth Avenue, will remain open, according to union leaders.
The Hilton, Oregon's biggest hotel, is staring down a still struggling economy and deep cuts in corporate travel.
"It's one of the more challenging markets we've seen nationally," said Elaine Sahlins a senior vice president at hotel consulting firm HVS San Francisco.
In Portland, more rooms are sitting empty and even those with a head in the bed are going for less.
Hotel occupancy in the central city was 85 percent in July, down from 87 percent in the same month a year earlier, said Jeff Miller, president of Travel Portland. Miller said the decline in occupancy was relatively small in part due to the national Elks convention.
But the average room rate in July was $125 compared to $146 a year ago.
The revenue per available room -- a key industry measure -- was down nearly 17 percent in July from the same month last year. That falls at the low end of markets across the country. Sahlins said revenue per available room is down between 15 percent to 25 percent in U.S. markets, Sahlins said.
Downtown Portland hotels are also facing stiffer competition after Sage Hospitality Resources of Denver opened two new hotels with more than 500 rooms just as market went into its funk. At one of those hotels, The Nines, Sage's business was off so much that it sought a delay in loan payments to the City of Portland's urban renewal agency.
Marks, the Hilton general manager, said early this week that the hotel routinely shuts entire floors during slow weeks to cut cleaning and energy costs. He projects the Hilton's occupancy could be as low as 30 percent in some winter weeks. But he said the hotel hadn't finalized its winter plans.
The Hilton, Marks said, has already laid off 20 percent of his staff.
The Hilton leans heavily on corporate travel, business events and group bookings. Business travelers have cut way back because of the recession and public outrage over AIG executives who enjoyed a spa treatment soon after their federal bailout.
"It's morally difficult to justify high-end travel from the corporate side," Sahlins said. "Until that eases up, it may be hard for rates to grow." Ryan Frank: 503-221-8519; email@example.com; blog.oregonlive.com/frontporch.
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