Hotels’ Heartbreak : 2 Open Today Despite Room Glut, Slump

In more than 25 years in the hotel business, Michel Tourniaire has worked through a revolution in Afghanistan and a coup in Thailand. Now comes one of his most daunting assignments yet: opening a hotel in downtown Los Angeles.

“I was always dropped into interesting situations,” said Tourniaire, who today will greet the first guests at the 439-room Inter-Continental in the midst of a regional recession, a glut of hotel rooms and tensions left over from the Los Angeles riots.

To help fill the first major downtown hotel to open in several years, Tourniaire has opted for practicality over perks. A fast front desk and prompt room service takes precedence over bathroom soaps and exotic flower arrangements.

Guests will be able to stay at the Inter-Continental, one of the country’s more luxurious chains, for as little as $119 a night.

The same attitude prevails at Red Lion Hotels & Inns, which is opening a 350-room hotel in Glendale today. Stephen J. Giblin, executive vice president of sales and marketing, said guests are more cost- and value-conscious now.

“You have to define what the customer really wants,” Giblin said. “They are not looking for a high-end (hotel) restaurant. They don’t want to spend $22 for breakfast. They don’t care if it’s hand-squeezed orange juice. They want a nice meal, and they want to get in and out quickly.”

While Los Angeles represents an extreme example, experts say the entire country is awash in hotel rooms as a result of a 1980s building boom. (The Inter-Continental and the Red Lion were both conceived during those peak years.)

The industry’s self-inflicted woes have been aggravated by the recession and Gulf War, which cut deeply into domestic and international travel.

The industry may not experience significant improvement for two to three years, according to PKF Consulting, which serves the lodging and real estate industries.

Faced with depressed room rates and occupancy, hoteliers have been forced to rethink some of the free-spending ways they adopted during the fast-growing 1980s. Back then, hotels gave less thought to the cost and value of the amenities used to woo guests.

Hotel bathrooms suddenly overflowed with shampoos, soaps, conditioners, blow-dryers, sponges and even rubber ducks, said Donald J. Henderson, general manager of the Hyatt Regency Los Angeles.

“We competed on who would have the largest bars of soap,” Henderson said. “We really got carried away.”

After surveying guests, hoteliers discovered that many 1980s frills were not so highly valued.

Tourniaire, for example, was surprised to find that one of his favorite amenities--a gift of flowers or a fruit basket in rooms--did not rank that high with guests.

“You have to know when something stops having an impact on customers,” Tourniaire said. “Will guests spend $20 more just because you have orchids in the lobby?” Not these days.

To avoid losing guests by reducing visible services, hotels have cut back-room services and operations.

The Hyatt Regency Los Angeles, for example, saved money after merging the security and engineering departments with those of the shopping and office complex where the hotel is located.

The industry has also tried to get more out of its workers through additional training and other methods. Some hotels pay a bonus to maids who clean more rooms in less time, said Robert Mandelbaum, director of research at PKF Consulting. At Red Lion Inns, the company devotes more attention to estimating the size of banquet crowds to avoid over-staffing.

Despite all the attention paid to cost cutting and low introductory prices, the downtown Inter-Continental expects to post a loss in the first year, with occupancy averaging in the disappointing 40% range, Tourniaire said. “If we achieve that, we will be happy,” he said.

An additional problem is that the hotel is locked in a dispute with the Hotel Employees and Restaurant Employees Union, which wants to organize the Inter-Continental’s work force.

Downtown hotels in general have suffered the most at the hands of the recession and the Los Angeles riots, which saw travelers switch to hotels in suburban areas.

The new Red Lion Inn in Glendale, in contrast to the downtown Inter-Continental, is expected to turn a profit and maintain occupancy in the 60% range, its owners said. Overall, the occupancy rate for Los Angeles County hotels will average 63.2% next year, while downtown hotels will manage only 52% occupancy, according to PKF Consulting.

But analysts say the hotel industry is on the rebound--although a slow and painful one. For downtown hoteliers, the opening of the expanded Los Angeles Convention Center sometime next fall will help fill rooms.

“Los Angeles is a challenge,” Tourniaire said last week as gardeners potted plants in the airy lobby while bellhops received instructions on the four levels of VIP guests. But the hotel “is here to stay for the long term,” he said.