PANIC IN PARADISE
By Joe Brancatelli
January 27, 2009 -- Weather wizards say this has already been the coldest, snowiest, nastiest winter in decades—and that would normally be great news for hotels and resorts in sunny climes such as Florida, the Caribbean, Las Vegas, and Hawaii.
But there's panic in paradise in 2009. The colder the weather—and the economy—the fewer the number of travelers who are making their way to beaches and resorts in the sun.
Even a trip to Tampa for this Sunday's Super Bowl remains a bargain. As recently as last week, JetBlue Airways had flights from New York on Super Bowl weekend for as little as $99 one-way. Prices jumped to around $200 yesterday, but I still found rooms at a waterfront resort about 25 miles from Raymond James Stadium for $169 a night. Travelers are so parsimonious that Pricewaterhouse Coopers predicts visitor spending on Super Bowl XLIII will be down 20 percent compared with last year's big game in Glendale, Arizona.
Things are even worse in Las Vegas, where high (and low) rollers have deserted the tables. The Nevada Gaming Control Board says profits at the state's casinos fell 69 percent last year and gaming revenue was the lowest since 2002. Gamblers who do make it to Sin City this weekend to get down a bet on the Arizona Cardinals or Pittsburgh Steelers will be there for the final weeks of the Les Folies Bergére topless revue. The famed show at the Tropicana Hotel closes in March after a 49-year run.
"I've been joking that I'm having trouble giving away the product," says the general manager of a luxury resort in the Caribbean that is offering guests a third night free with every two paid days. "But if football and flesh doesn't bring them in, I'm not surprised that free rooms aren't working, either."
The news is bad everywhere the sun shines. In Hawaii, room rates and prices have plunged. For the week ending January 10, for example, occupancy statewide tumbled 10.3 percentage points to 62 percent. On Maui, just 58 percent of the rooms were filled. The statewide room rate fell 6.6 percent and averaged just $200 a night.
Last spring, when Aloha and ATA airlines folded within days of each other and Hawaii abruptly lost about 20 percent of its flight capacity, state tourism officials worried there wouldn't be enough seats to accommodate potential visitors. Now, not so much.
Inter-island carriers are selling flights for as little as $27 one-way. And when my old friend Jeanne Datz Rice called about a 25-day West Coast sales and marketing blitz being mounted by Marriott's 10 resorts in Hawaii, she couldn't help but talk about her flights to California. "I booked four days out and paid just $300 roundtrip on Hawaiian Airlines. And there were empty seats next to me."
(By the way, Marriott is discounting lustily on its Hawaii properties no matter where you live. Among the offers on the Marriott Hawaii website: free room nights; free breakfasts for two; resort credits of as much as $75; shopping credits of $100; golf-and-spa packages larded with lots of freebies; and free car rentals.)
In the Caribbean, travelers seeking bargains this winter are finding big ones: beachfront rooms in famous resorts for less than $100 a night; cheap inter-island cruises; all-inclusive stays (including breakfast, dinner and water sports) for less than the normal room rate; and island-wide promotions. On St. Kitts, for example, the Feel the Warmth promotion offers free room nights; food and beverage credits of $75; and even 10 percent off airfares.
The bargains in Las Vegas are so gigantic that I couldn't figure them out myself. I called Howard Lefkowitz, the chief executive of Vegas.com, for a little help. After a little patter promising that "everything is 25 to 30 percent" less than last year, Lefkowitz agreed to a real-time test.
"What would a room at the Bellagio cost me tonight?" I asked. After a few keystrokes—I heard his keyboard clacking over his website—he found a $129 rate for a standard room at the five-star property. "That probably would have cost $225 last year," he said. "What would $129 have gotten me last year?" I wondered. Lefkowitz didn't hesitate: "A night at Paris, a nice four-star resort." What was Paris charging tonight?" I asked. A few more keystrokes and Lefkowitz had an answer: $90.
Needless to say, the miserable winter is exacting a toll on the resorts, which literally (and obviously) live and die on tourism. In Las Vegas, several high-profile new projects have been abandoned, some of them after construction had begun. And Smith Travel Research, the go-to statisticians of the lodging business, says there are just 21,450 new rooms in the city's "active pipeline." That's 50 percent fewer than were being readied last year.
Layoffs are also escalating—even at mega-resorts that once seemed immune from normal business cycles. Atlantis, the sprawling complex on Paradise Island in the Bahamas, recently let 800 workers go. Last Sunday, Our Lucaya, the resort on Grand Bahama Island that is home to both a Sheraton and a Westin hotel, dismissed 181 employees, nearly a fifth of its workforce. And Disney has been forced to put its vast empire on a diet. It offered buyouts to more than 600 executives last week, including more than 300 in Orlando. The company says it will resort to layoffs if too few mouseketeers walk away voluntarily.
I only found one happy hotelier in the sun: Tom McCallum, director of The Reef, a mid-scale, all-suite, beachfront resort on Grand Cayman where rates are a modest $250 a night.
"My hotel is full of people who might have been at the Ritz-Carlton last year," he explained. "There's a lot of 'guilt downsizing' going on. People still want a holiday, but they can't justify an over-the-top place. They do their homework and see that I have a great property at a great price right on the beach. This isn't a year when people are willing to pay for hot and cold running bathrobes."
The Fine Print…
Early in the season, hoteliers in warm-weather spots were pushing value-added deals rather than "naked discounting," the industry jargon for absolute rate reductions. But as the slump has continued into February—the highest of the high season—many properties are slashing rates too. "Call me," the general manager at a new hotel in Miami advised. "I'll offer you a price you won't find on the Web."
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2009 Condé Nast Inc. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.