The hotel industry found itself literally at the center of the storm last week as
victims of Katrina included hotels themselves, guests, staff and the tourism
industry that fuels New Orleans’ economy. The city has 38,000 hotel rooms, a
45 percent increase in the last ten years.

It’s no surprise that hotels were the subject of blistering criticism, effusive praise

and everything in between.  

Hotel headlines:

* A front page story in a leading New Jersey daily portrayed staff at one
luxury hotel feasting on gourmet food and wine in the midst of the devastation.

* From a story in the Miami Herald: “The Hyatt Regency in downtown
New Orleans has joined a long line of hotels around the world in which journalists,
government officials and emergency personnel have congregated to weather a
crisis and manage—or cover—the response. The day after several hundred
hurricane evacuees managed to leave the building, along with most of the
employees, the Hyatt on Saturday began to resemble the bunkered-down hotels
of war zones:the Mille Collines in Rwanda, the Commodore in Beirut and the
Palestine of Baghdad. The mayor, police chief and fire chief are all staying here,
along with a hundred or so police officers from various agencies, and some 150
National Guard troops. Dozens of journalists from around the country are camped
out in rooms and hallways. CBS's 60 Minutes set up in the center of the closed restaurant to film an interview with the mayor. (The general manager) had 3,800
people holed up in the 1,200-room hotel during the storm, including
150 stranded tourists and hotel employees and their families.”

* Hotels found themselves part of the political controversy over the
handling of the storm. In the midst of the crisis, Senator Mary
Landrieu emotionally called on hotels in the region to take in evacuees.
In Texas, the comptroller waived the state hotel/motel tax for victims.

* The American Red Cross and the Federal Emergency Management
Agency offered to reimburse hotels and victims for up to two weeks of
stay in any Houston-area hotel.

Here’s a quick look at what happened to hotels in New Orleans during and after the hurricane:

* A prime task for hotels was evacuating their own guests. Marriott,
for one, chartered buses with armed guards to evacuate about 2,000 people who
sought shelter in its hotels. The Ritz-Carlton, submerged in four feet of water,
saw delays in evacuating guests because buses were commandeered for
rescue efforts.
There were other reports of hotel guests getting priority for evacuation.

* While some chains have multiple hotels in New Orleans they tend to be
franchised or managed locations so that the actual physical losses fell on the
owners of the hotels, rather than the brands.

* The infrastructure of the French Quarter, location for many hotels, survived,
thought it is battered. On Labor Day, three hotels were able to light their
signs using generators. They hoped to bring back employees to help in the evacuation effort.

* It’s impossible to tell when hotels will reopen, although some like
the Sheraton New Orleans announced opening dates (October 31 in the
case of that hotel.) The water was still high when hotels started swinging
into action; Marriott sent 200 engineers and contractors to be ready to begin
work on its 15 New Orleans properties.

One Hyatt executive said the hotel hopes to open by next April 1, despite the
fact that over 500 guest rooms were damaged.

Of course, some hotels won’t rebuild unless they’re assured that flooding would
be prevented in the future.

* Hilton, Marriott and other chains waived cancellation fees for
upcoming months, and worked to reschedule meetings.  One meeting
industry consultant criticized some hotel companies for not waiving the fees for
a longer period of  time. At the Hyatt Regency, cancellation fees have been waived through March 31, 2006.

* Hotels in the region’s unaffected areas experienced a surge of demand.
As a result, companies cautioned guests with reservations to reconfirm to
insure their rooms would still be there.

* Chains sought to care for their own employees. Wyndham employees
opened their homes to co-workers and the company offered workers two
months salary. Many employees are living in hotels in other states. Hotels were
making substantial efforts simply to locate employees.

* Hotels in the region are putting up evacuees, but can only afford to do so for
long. In fact, Tallahassee hotels were asking evacuees to leave over Labor
Day Weekend to make room for guests long booked for a football game.

* Hotels made many Good Samaritan gestures. For instance,
Marriott is letting employees donate paid time to help victims. Also,
members of Marriott Rewards can redeem points for Marriott Gift Cheques,
which can then be used towards payment of rooms or food for victims.

Some chains offered discounts to travelers. Jameson Inns offered free long distance calling, “significant” discounts and complimentary rates.
Starwood hotels throughout Texas and other areas continue to provide
support and services for evacuees—from providing housing and meals for
displaced staff to accepting clothing and other donations, to hosting special family events.

Meetings Mess

New Orleans is the nation’s fifth biggest convention destination.
Many meetings are scrambling to find alternative venues. The city’s convention
center, scene of some of last week’s most wrenching despair, is itself severely damaged.

According to USA Today, about $1 billion in visitor spending will vanish with the
city’s loss of 300 to 500 meetings and conventions. The city has already
pulled the plug on meetings scheduled through the end of November.
Large meetings like the National Business Aviation Association, with 30,000
attendees, have moved to Las Vegas—despite the need to display more than 100 aircraft.

According to the New Orleans Convention Bureau, convention goers spend about
40% of the $5 billion spent each year by visitors. New Orleans convention
officials were in discussions with other cities to see if they could
“switch years”—have a meeting scheduled for New Orleans in another city
this year so New Orleans could get it in a future year.

* There are ripple effects far and wide. For sentence, the George R. brown
Convention center in Houston, being used to house evacuees, has cancelled
some events.

Going Back to New Orleans

Restoring New Orleans’ tourism and convention business won’t be easy.
The industry will face the challenges of attracting both employees and
customers back to a city that will never be the same.

Bear Stearns hotel analyst Joseph Greff wrote, “We believe the impact of lost
demand for the leisure and business travel segments will be somewhat
alleviated initially from demand from emergency, rescue and insurance agents
and subsequently from developers, construction workers and displaced residents.”

According to the Dallas Morning News, “Corporate and group travelers,
the lifeblood of the industry, aren’t likely to make a speedy return because the
damage has been so severe, and many companies have opened offices elsewhere.”

J. Stephen Perry, president and CEO of the New Orleans convention bureau
offered this, “It may be quite a while, but one day the riffs of jazz trumpets,
|the indescribable tempting smells wafting from the kitchens of our great chefs,
the aroma of cafe-au-lait and beignets, the buzz of great conventions,
that foot-wide magnetic smile of the front bellman, and the romantic strolls
through the Quarter will be commonplace again.”