Room at the Inns : Agent's Overpricing Cost Them Business, Hoteliers Say

By THOMAS S. MULLIGAN

June 18, 1994 12 AM PT

TIMES STAFF WRITER

The hype came early and often.

The hotel industry was told that soccer’s World Cup, the 52-game international spectacle that opened Friday in Chicago and comes to the Rose Bowl today, would be its chance to cash in on the world’s most popular sport.

But World Cup bookings have fallen short of expectations in the nine cities involved, and some hoteliers now grumble that because of overpricing, their opportunity was booted.

“Official” room rates--for accommodations purchased through the World Cup’s exclusive, for-profit contractor--are in some cases double the price typically available to business travelers and significantly higher than the “rack rate,” or the full declared price normally printed on a card on the hotel room door.

“It looks like greed and smells like greed,” said Roland Baumann, general manager of the Hyatt Regency Crystal City, near Washington’s National Airport and 10 miles from Robert F. Kennedy Stadium, the venue for five Cup matches.

Baumann said the 450 rooms he blocked out for sale by the World Cup Accommodation Bureau, the official contractor, were offered at $190 a night--about $40 higher than he expected and far too expensive for his area.

“I have 685 rooms to sell, and I’m selling something like 50 or less,” he said. “With rates more reasonable, we at least would have had a chance at more business.”

Across the country, the Accommodation Bureau now expects to provide about 500,000 hotel room-nights during the one-month tournament. That’s about half the number of room-nights originally blocked out, or committed to the bureau, by more than 600 U.S. hotels.

Los Angeles-area hoteliers say bookings are running at about 50% of the number blocked, but they expect to do far better in the last week of the tournament, culminating in the July 17 championship game at the Rose Bowl in Pasadena.

As foreign bookings have failed to materialize, the Accommodation Bureau has given rooms back to the hotels to market on their own to domestic customers. The returns have come in stages since December, with some rooms being released as late as this week. In Detroit, Dallas and Orlando, Fla., many hotels got all or most of their rooms thrown back and have had to scramble to try to fill them.

An unknown number of additional rooms have been booked outside the official block.

World Cup USA--the organizing committee--projects that the Cup will generate $4 billion nationwide through foreign and domestic travel and tourism, licensed product sales, media rights fees, corporate sponsorship, game tickets and other items. The estimate comes from a USC study.

High room rates are one reason cited by hoteliers and tourism officials for low occupancy. Others include weak economic conditions abroad and the failure of several of the most popular teams to qualify for the 24-team championship tournament.

Of the six teams with the largest retinues of traveling, spending fans, four fell short in the qualifying rounds: Britain, France, Japan and Australia. Fan favorites Germany and Italy made it, but so did some teams with minuscule followings, such as Bulgaria and Morocco.

“I have never said this was going to be 52 Super Bowls,” Jaime Byrom, owner and president of the Accommodation Bureau, said in an interview this week.

Byrom also defended his pricing. Hoteliers who signed with the bureau all agreed to supply rooms at 75% of their 1993 rack rates and were told that the bureau would mark the rooms back up to rack rate or a little higher before offering them to foreign tour operators, he said.

The final rate to foreign tourists, of course, would be higher after the tour operators added their own profit margin, Byrom explained, but he asserted that in no case did he charge tour operators more than 8% above rack rates.

“Nobody twisted anybody’s arm to sign these contracts,” said Randy Villareal, general manager of the Biltmore Hotel in Los Angeles.

“We knew what we were signing and we expected what happened,” he said, adding that bookings in Los Angeles have been well below the rosiest projections but in line with the expectations of hoteliers with international experience.

Byrom, a Mexican citizen who lives in Manchester, England, got into the World Cup business eight years ago when Mexico hosted the event. He parlayed a minor role in that tournament into a larger contract with the 1990 World Cup in Italy.

Finally, a year ago, he landed the prime contract for the U.S. World Cup. He said it represents the largest single international travel undertaking in history, topping the Barcelona Olympics of two years ago. Byrom said he has spent hundreds of thousands of dollars developing computer systems that enabled him to offer a consumer-friendly innovation: a system of prepaid hotel room vouchers that eliminates the need for specific reservations tied to the guest’s name.

Byrom and World Cup USA said organizers took pains to avoid the experience of the Italian World Cup, where rooms were selling at two or three times rack rates and fans were forced to pay large deposits and book multiple-night stays if they wanted game tickets.

Because the Accommodation Bureau does not control tickets--the most precious commodity--it has no monopoly and is just another competitor, said Sunil Gulati, chief international officer for World Cup USA.

With equal access to tickets, tour operators have been free to book rooms in hotels that did not sign with the bureau.

But to some hoteliers, that’s precisely the problem. Some hotel and tourism officials say they were told there would be a link between tickets and official hotel rooms--providing a powerful incentive for hotels to sign up.

Byrom said no link was ever promised or implied during the year he has been involved with the project.

San Francisco expects to sell 25,000 room-nights through the Accommodation Bureau, down from the 188,000 room-nights in the original block, said John Marks, president of the San Francisco Convention & Visitors Bureau.

The hoteliers “know we have stuck to the deal,” Byrom responded. “We’ve been disappointed in some cases with the level of demand, but we couldn’t create business where no business could be had.”

Times staff writer Greg Johnson in Orange County contributed to this report.

Room at the Inns : Agent’s Overpricing Cost Them Business, Hoteliers Say

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