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Rebounding - Steady But Slow

With yet another annual International Hotel/Motel & Restaurant Show Hotel / Motel show upon us, it seems to be the perfect time to take a look at where the industry is headed. Having faced a slow period, questions on many minds remain: Are travel and tourism back? It seems so, according to participants at the first American Hotel & Lodging Association (AH&LA) U.S. Lodging Industry Summit.

In May of this year, they collectively expressed encouraging predictions for the rebounding U.S. travel and hotel industries. Internet travel bookings have increased 30% since 2003 and the average daily rooms sold has increased 1.6%. New hotel construction and hotel reflagging is also on the increase.

Patrick Ford, president of Lodging Econometrics, an industry authority for hotel real estate, factors in better than expected business demand, strong tourist travel and the ability to increase guestroom rates as creating revenue improvements at a quicker-than-anticipated pace. As part of its 2nd quarter report to the industry, Lodging Econometrics forecasts supply side growth for all 50 states and 197 markets in their second quarter 2004 report. It's slow growth but a growth.

In The Pipeline
Building a hotel is a 3-7 year process or 'pipeline' from idea, through development, to cutting the ribbon according to William Frye, Assistant Professor at the College of Hospitality and Tourism Management at Niagara University and editor of the Rooms Chronicle, a journal of hotel rooms management. This explains why, until recently, there has been a slowdown in the hospitality sector.

"Because of the economic downturn we've been in since 2000, we see the effect resulting in fewer hotels in the pipeline," said Frye. "Even though the economy soured in 2000, 2001 and 2002 hotels were still in the pipeline from before but we're seeing the growth slowdown now as fewer in the pipeline."

According to Frye, 9/11 played a part in the slowdown picture but the bigger culprit was the economy. And the American Hotel and Lodging Association (AHLA), a 93-year-old federation of state lodging association, concurs with his assessment. A header in their 2003 Lodging Industry Profile states "Please note; Due to a general overall weakening of the economy through 2002, the lodging industry is still recovering following 10 years of record-breaking performances."

Another piece of the slowdown in hotel growth picture is the nationwide trend of older hotels built in the 1960s and '70s being retired, that is sold off, converted to condos etc. according to Frye. He concurs, however, that occupancy levels are starting to bounce back post 9/11 and that in turn has an effect on how quickly hotels get developed. In terms of occupancy the ballpark is a high 50% and low 60%," said Frye. "We've gotten down as low as 55% post 9/11 and are now up to 60% and 65%." Room rates have also been steadily increasing.

"From 1991 to 9/11 the US lodging industry commanded a higher daily average rate every year and outpaced inflation which rated 3% - the ADR was increasing between 5-9% every year for 9 years," said Frye who pointed out that there are only two ways the hotel industry can grow; profits or occupancy.

Hotels and Their Laundries
So what's happening in hotel laundries? According to an article entitled "The Practice of Hoteliers Outsourcing Their Laundry is Growing" by D.E. Leger published in the Miami Herald, Knight Ridder/Tribune Business News in May, 2004, an increasing number of hotels are outsourcing their laundry. A 2004 Lodging Survey published by the AHLA shows that 86% of the hotels surveyed in 2001 answered yes to having an OPL while in 2004 only 83% said yes.

But Frye maintains that for the most part OPLs are still the majority. Even Lydia Westbrook, Research Director at the AHLA Information Center in Houston, TX admits that they cannot strictly say that OPLs went down 3% across the board due to the survey sample size and other factors.

Further, those that do choose to outsource are doing so out of necessity and not choice. "We're finding that hotels that do outsource do so out of necessity and not savings i.e. it's because physically there's no room for an OPL," said Frye.

In terms of new equipment Frye reports that there has been no new equipment introduced. "The flat bed rollers that are combination folding machines are as advanced as the hotel laundry industry has gotten, which is not advanced," he said. In terms of new technology, nothing other than your washer-extractors that are using computerized chips etc. he noted.

Ozone Usage
Ozone, the energy efficient alternative to conventional laundry systems, is catching on industry wide and being used by reputable hotels according to Phil Sprague in his August, 2004 article "Ozone Laundry systems save water, energy and chemicals," published in the Rooms Chronicle.

"It's an energy saving technology and good for the environment, but you just want to be sure that you're dealing with a reputable firm," advised Sprague who works for PSA Energy Consultants based out of Minneapolis, MN. The use of ozone is reported to save laundries water and chemical costs.

The Future:
Although no one can predict the future with precise accuracy, it seems that the industry, having suffered after 9/11, is rebounding slowly but surely. And predictions are positive for what lies ahead!

Quick Rinse - News From Around The World

Ecolab Receives Environmental Stewardship Award

AUSTRIA - An environmental stewardship award was recently given to Ecolab Inc. in Austria in recognition of the their efforts to reduce the carbon footprint of a local hospital laundry. The award is for implementing their PERformance SMART low-temperature at an Austrian hospital. The laundry program is said to reduce water and energy usage, in addition to shortening wash time.