Healthy Skepticism Library item: 17116

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Hudson K
Don't Use the R-Word: Hotels Find Trick to Business Bookings
The Wall Street Journal 2010 Jan 26
http://online.wsj.com/article_email/SB10001424052748703822404575019212570293060-lMyQjAxMTAwMDIwNzEyNDcyWj.html

Abstract:

Accommodations Include Spa, Tee Times-But ‘Resort’ Is No Longer on Letterhead

Full text:

To attract business conferences in these tough times, some luxury resort hotels have resorted to a sort of strategy of last resort: They’re dropping the very word “resort” from their names.

The Ballantyne Resort in Charlotte, N.C., changed its name during the summer to the Ballantyne Hotel & Lodge after several corporate clients indicated it would have a better chance of landing their business if it weren’t called a resort. Same for the Westin Stonebriar near Dallas, formerly the Westin Stonebriar Hotel & Resort. Ditto the Renaissance Orlando at Sea World, no longer the Renaissance Orlando Resort at Sea World.

Other than the name-dropping, little else has changed. The bedsheets at the Ballantyne remain Egyptian cotton, and guests still can book an appointment at the spa. Guests at the Westin Stonebriar still can get a tee time for the property’s Tom Fazio-designed golf course. And those at the Loews Lake Las Vegas-a resort no more-aren’t deprived of the property’s “white-sand beach” on the lake nor master sushi chef Osamu “Fuji” Fujita’s culinary creations.

“It doesn’t change who we are,” Renaissance Orlando sales director Gary Dybul said. “But there’s no reason to put roadblocks in the way” of landing conferences.

That such trivial compromises are needed to salvage business is a sign of the times for luxury hotels and resorts. The industry is in the throes of its worst downturn since the Great Depression, with occupancy at historic lows and many properties facing foreclosure. Resorts must also contend with public backlash against the conferences they host.

The resort stigma was stoked by widespread outcry late in 2008 about a $400,000 sales retreat that American International Group Inc. planned to host at the St. Regis Monarch Beach resort in Dana Point, Calif. Facing scorching criticism, AIG, the recipient of $180 billion in taxpayer assistance, canceled the event. The 400-room St. Regis couldn’t recover from the bad publicity and was foreclosed upon by one of its lenders, Citigroup Inc.

Hoteliers call the resulting fallout the AIG effect. Politicians railed against companies-especially those that got federal aid-meeting at resorts in live-it-up locales like Las Vegas. In turn, companies and government agencies revised travel policies to discourage, if not prohibit, resort stays. Particularly sensitive to the backlash were financial companies, government agencies and medical companies-those that do business with the government or have millions of customers to answer to.

Making matters worse for hoteliers, the uproar came in the wake of the pharmaceutical industry’s revising its code of conduct in 2008 to discourage holding conferences at resorts.

Companies “are just being very conscious of the location selected, because everybody’s so paranoid about perception,” said Jennie Jacobson, president of event-planning company Unique Events Inc. in Agoura Hills, Calif.

Ms. Jacobson said one of her clients, a medical-products company she declined to name, recently sought to avoid vilification by canceling a 2010 conference in Barcelona in favor of what it considered a tamer location not in Spain but in a downtown Los Angeles hotel.

Allstate Insurance Co. early in 2009 canceled all its off-site meetings, including gatherings meant to reward its sales force. Not until last fall did Allstate resume the gatherings. “Our meetings were completely canceled by perception, not cost,” Allstate meeting manager Laurie Fitzgerald said at the Professional Convention Management Association’s conference in Dallas in January.

That trend has slammed resorts at the worst time. Since 2007, resorts in North America and the Caribbean have posted results worse than the industry averages, registering a 22.6% decline in revenue per available room and a drop in occupancy of 8.9 percentage points to 58.1%, according to Smith Travel Research.

There are few signs that conditions will improve soon. Big hotel chains including Marriott International Inc. have reported that revenue from group meetings declined by more than 20% in last year’s third quarter from a year earlier. Starwood Hotels & Resorts Worldwide Inc. recently disclosed that the volume of group meetings it has contracted to host in 2010 is “below the already low numbers we posted in 2009.”

But Dale McDaniel, general manager of the 493-room Loews Lake Las Vegas, says a name change has improved his property’s bottom line. The hotel removed “resort” from its name in the spring of 2009 as did two other Loews Hotels Inc. properties: the Loews Ventana Canyon in Tucson, Ariz., and the Loews Coronado Bay near San Diego. “There could be as much as a 10% swing in business,” Mr. McDaniel said. “All it takes is a couple of large pharmaceutical groups to book here because we don’t have resort in our name.”

The change so far has helped the Loews Lake Las Vegas land five conferences totaling 1,000 room nights-four with pharmaceutical companies and one with an insurance company, Mr. McDaniel said. He declined to identify those companies. But two that held conferences at the property after its name change-Medco Health Solutions Inc. and Astellas Pharma U.S. Inc.-say their meetings there were all work and little play.

Any of the attendees at Astellas’s conference last November who got massages in the spa, hit the links or rented a boat to cruise the lake did so on their own dime. Astellas spokeswoman Jenny Keeney noted that the conference was held at the Loews “because of its suitable meeting accommodations and cost effectiveness.”

Medco chose the Loews from among 10 properties that submitted bids to host its four-day conference last December. The Loews got the nod because of its “exemplary service, highly competitive rates and proximity to Medco’s operations,” a spokesman said. Any pedicures and other extras were paid for by the attendees, he said.

The Loews Lake Las Vegas needs the boost its name-change provided. The sprawling development that surrounds it-home to two resorts, a casino, three golf courses and thousands of homes and unbuilt lots-filed for Chapter 11 bankruptcy-court protection in 2008 and closed two of its golf courses after defaulting on a $540 million loan. The Loews hotel itself was foreclosed upon in June after defaulting on its $117 million securitized mortgage. Loews continues to manage the property.

The average $160 nightly rate at the Loews Lake Las Vegas is more in line with a conference-center hotel than a swank resort. The property offers resort amenities to go along with its conference rooms, including two sprawling pools with 15 cabanas and a 9,000-square-foot spa. Yet it posted occupancy of only 42% for 2009.

Changing the Las Vegas property’s name, and the others’, became an easy decision when Loews executives noticed the properties weren’t being considered by conference-site selectors because of the the r-word. “We didn’t even have an opportunity to bid on those meetings” previously, said Michael Dominguez, Loews vice president of global sales.

“We had a couple of clients say it was going to be written into their travel policies that they cannot meet at resorts,” said Joe Hallow, president of Bissell Hotels, which owns the 249-room Ballantyne nonresort in Charlotte. “So our goal became to make sure that we’re properly defined by name.”