Hoteliers to Tap New Revenue Sources : Emphasis on Market-Share Increases Predicted at Luncheon

Trends in the hotel industry through 1990s are expected to center on market-share increase, stratification, economical justification for an operation, greater profits through increased performance evaluation of management companies and operational analysis.

These points were stressed by R. Britton Colbert, director of Leisure Times Advisory Board of Laventhol & Horwath at a Hyatt Wilshire luncheon program of the Los Angeles chapter of the Society for Marketing Professional Services.

“I think we’re also going to be taking a much closer look at the food and beverage potential,” Colbert said. “Hotels should be focusing on their underutilized banquet facilities and even coffee shops as potential money makers that not only service hotel guests but the general public.”

Also sharing their expertise at the meeting were panelists Russ Dazzio, vice president of marketing for U. S. Properties; Douglas Miller, director of finance and development for Ashkenazy Enterprises, and J. Arthur Hansen, executive vice president, Days of the West Inc. (Days Inn).

Mid-Range Competition

The fact that top-of-the-line hotel chains are reaching down to establish a mid-range product may offer some threat to existing mid-range hotel operators, said Dazzio, whose company owns and operates 18 hotels with under 300 rooms.

He said that while new construction has attracted business away from medium-priced hotels, newer facilities, because of their high initial cost, have not gained a competitive price advantage.

“The changes of activity within hotel groups have actually created new opportunities,” he added.

Dazzio said that much of the activity of U. S. Hotels is directed toward distress hotel situations in secondary and tertiary cities. The company’s strength is in its ability to spot an underperforming property that may need capital infusion, some refurbishment, and to turn it around, boosting the credibility of the property by also adding a chain affiliation tag.”

Miller spoke on the trend toward stratification in the industry. “The Ashkenazy Group’s orientation has been focused on more affluent neighborhoods, stressing the small, luxury 250-room hotel on the high end of the market,” he explained.

“Our all-suite concept is one that has worked successfully for us and is now directed more specifically toward the commercial traveler, with luxury accommodations that include desks, ample lighting, phones with hold buttons and comfortable conference areas. We look to the tourist traveler basically for fill-in business.”

Miller skirted the question about rumors that Ashkenazy Group’s flagship hotel, the L’Ermitage in West Los Angeles, might be for sale. Another question from the audience dealt with whether there was an oversupply of rooms in the firm’s present hotel inventory.

“There has been some change in client needs since the L’Ermitage was opened 10 years ago and we have also faced some political difficulties along the way, but the advantage of being in place, as we are, in a desirable area that will continue to grow, is an auspicious one,” Miller stated.

Hansen, who has spent the past few years exclusively in the development of Days Inn hotels, based in Atlanta, is primarily involved with site evaluations and purchases on the West Coast. “Days of the West Inc. has an aggressive marketing plan to capture what we term the ‘middle market,’ the largest and fastest growing segment of the traveling population.

“Our company was introduced in California in 1981 with a three-story, 175-room motel in Sacramento. We hope to have 40 property starts by 1990.”

The original concept for Days Inn hotels was tied in with traveling families, but, Hansen explained, the oil embargo of the 1970s changed that. “We now look to the corporate/commercial client, with a tourist mix.”

The successful components of a Days Inn facility, such as the one at the San Diego (405) freeway on Century Boulevard, is its full-service format that focuses on good value for the moderate market level, while maintaining attractive elements, such as a central courtyard, pool and landscaping.

Colbert believes the future of the hospitality industry in the Greater Los Angeles area is positive, stating that there are now 150 hotels with more than 150 rooms with near 38,000 guest rooms.

“I believe that the economy of Southern California will sustain considerable growth in the next decade,” Colbert said. “L. A. continues to be strong because of its diversified employment base and because it is a year-round tourist mecca with the key advantage of LAX being a primary entry for international travel from the Pacific Rim.”

SMPS members include marketing coordinators and in-house staff of architectural and engineering firms, directors of marketing and business development and owners and principals of architectural and engineering firms.

Lloyd H. Bakan, vice president at Daniel, Mann, Johnson & Mendenhall and one of the founders of SMPS, explained the goals of the group that was formed 11 years ago: “Our posture is that of upgrading the marketability of the firms we represent.

“In the past, architects and engineers have not been trained in stand-up presentations. Our programs help in that transition from when the market was not so competitive, to the present need for sophisticated approaches and follow-up. The days of the ‘good ole boy’ relationships in business are gone.”