It’s been a long time since I’ve spared a thought for Fox Mulder, Dana Scully, or the rest of the gang at the 1990s TV show “The X-Files.”
But as I follow the conversation and listen to hoteliers’ reassurances about the wave of hotel defaults and foreclosures in this brutally tough economy, I’m pretty sure I know what Mulder would say if he were here:
I want to believe.
With hundreds of U.S. hotels running into rough financial waters, the consistent message from hospitality suppliers is that those properties can still meet their obligations for the meetings they’ve booked. Mike Dominguez, vice president of global sales for Loews Hotels, for one, says it would take a fairly special set of circumstances to put a meeting at risk.
“It’s important for people to understand the way the processes work,” Dominguez explained in a recent interview. “With many of the defaults you’re reading about, it doesn’t mean people aren’t paying back their loans. It means they’re in default on the terms they originally took out.” Banks are working with ownership groups to renegotiate loans, he said, and as the U.S. financial sector begins to regain stability, the lenders have some flexibility to help the hotels weather the storm.
“It would have been a disaster” if hotels had run short of cash in the fall of 2008, Dominguez said, “because the banks weren’t ready to work with them. Now, the banks are stable enough that there’s dialogue and opportunity.” Even if a hotel is sold, he said, the change may have no effect on signedor established relationships. “It’s just the ownership behind the management ,” and when the asset changes hands, the new owners inherit existing contracts.
However, he said that it’s important to pay attention to events that could affect participants’ on-site experience, such as a foreclosure that leads to a change in a property’s flag, brand, or rating. While he argues that those kinds of changes are expensive, and therefore, rare, this is where other industry voices are beginning to sound an alarm. “The contract is with the owners as well as the management company,” said Joan Eisenstodt, chief strategist at Eisenstodt Associates. “In fact, it should be with the owners doing business as whatever the hotel entity is. So there are huge issues.”
Eisenstodt, participating in an online discussion last week, predicted an increase in deflagging, as foreclosures increase and owners fail to meet brand standards. When that happens, she said, a poorly written hotel contract can leave a planner without the flexibility to move a meeting. “Those who plan meetings—and hoteliers who want to really be partners—need to have this discussion at the time a site is selected and include language in the contract to protect all parties.”
Mitchell Beer, CMM, is president and CEO of The Conference Publishers Inc., one of the world’s leading specialists in capturing and repurposing conference content. Beer blogs at http://theconferencepublishers.com/blog. Send comments, facts, arguments, or column ideas to email@example.com.