|By Steve Huettel, St. Petersburg Times,
Fla.McClatchy-Tribune Regional News
April 19, 2010--The economy continues to rain fat, sour lemons on the lodging business. But hotel veteran Gilles Arditi may have figured out a way to make lemonade.
His hotel management firm, Southwind Hospitality of Indian Shores, pitches its expertise in turning around failing properties. Nothing new there, except for the clients he's targeting: lenders trying to take over hotels from owners delinquent on their mortgages.
At a Clearwater hotel that Southwind runs as court-appointed receiver, Arditi talked with the Times about how the business got into this mess and the kinds of problems he's found at properties floundering in red ink (hint: you might want to check the carpet).
Just how bad is the hotel business slump that started in late 2008? As bad as the crash following the Sept. 11, 2001, terrorist attacks?
After 9/11, fairly soon there were signs of a rebound. A lot of reports showed January (2010) was the worst month since then, with occupancy down 30 percent. By the end of 2010, we could see a slow rebound, with room rates staying steady or increasing slightly in 2011, and the potential for a return to nicer days in 2012.
What happened, besides the obvious drop in business and leisure travel caused by the recession?
There was a significant problem with overleveraged property. Owners bought at inflated prices ... and are in trouble (with lenders) financially. I suspect many will find themselves in foreclosure or receivership in the next two years.
What do you typically find when you take over as receiver of a hotel?
Often, the sales and marketing is lacking totally. They're not utilizing everything e-commerce-related, including typical booking engines like Expedia, Hotels.com, Travelocity, Priceline. Especially social media like Facebook and Twitter. Sometimes we walk in and find they're overstaffed or there are contracts they haven't renegotiated -- waste removal, lawn care. A lot of these owners are not spending a dime, running it as tight as they can. So you get into service issues.
What about this property, the Economy Inn on U.S. 19 in Clearwater?
It was extremely dirty. There was no vacuuming, no carpet shampooing. Housekeeping was making beds but wouldn't do anything else. We had to teach them to properly do bathrooms, how to do rooms in a certain amount of time -- on average, 30 minutes a room.
How long were housekeepers working in each room?
An hour to an hour and a half.
Did you cut staff?
We didn't cut (the number) -- they were pretty thin. But we did change personnel.
What have you done to improve revenue?
We accessed businesses within 2 1/2 miles like MarineMax. They're still selling boats, so you have traveling salespeople coming through, boat mechanics and people delivering yachts. Because we're not branded, we can offer extremely discounted rates. We don't have to keep parity (with a hotel brand's Web rate).
How cheap can you get a room here for the night?
Sixty-nine dollars. Even a deeper discount on opaque sites (such as Priceline and Hotwire). The name of the game is to build a base, then build the rate as your occupancy gets higher.
Your work as receiver here is over in May. Is the idea that Southwind will continue managing the property after that?
The receivership ends when the lender takes title. We hope that our relationship also stays in place.
Steve Huettel can be reached at email@example.com or (813) 226-3384.
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