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Tampa hotel broker Lou Plasencia says he hopes he never again experiences days in his industry like he is now.
About 40% to 50% of some of his clients — hotel owners — cannot pay their debt service. By this summer, that figure might climb to 60%.
Business and leisure travel are down as people are staying closer to home and staying in lower-priced, limited service hotels.
Especially hard hit are resort and top-tier luxury hotels. Even though this is tourist-laden Florida, every part of the hotel industry is hurting. “I don't know of a single hotel between Crystal River and Naples doing better year over year,” Plasencia says.
So his company, The Plasencia Group, is doing a lot of work for owners and lenders.
There's a lot of cost containment, involving labor and the cost of goods.
A lot of little things that add up to big numbers, such as doing laundry at non-peak hours and a few days a week instead of every day.
He is advising some hotels to close restaurants and only open them at peak hours.
Some hotels are eliminating levels of middle management completely. Instead of cleaning rooms every day, hotels are cleaning them right before a guest needs it. Plasencia also works with borrowers and lenders to restructure loans.
Plasencia sees the lean times for hotels continuing through the summer and into the third and fourth quarters.
“There will be no major turnaround until sometime next year,” he says.
Hope is emerging, however.
The Plasencia Group's development management group is working with some clients looking to build new hotels. The cost of land and debt is way down.
“Some want to build and open in an upswing,” Plasencia says. Those new hotel sites are in Alabama, Florida and Pennsylvania.
“It would not surprise me to see, on the Gulf Coast, at least two to three new projects in the next 24 to 26 months, in urban and suburban locations,” he says.
Despite the economy, tourism is a major boost for Florida hotels.
“Thank God for tourism,” Plasencia says. “If we didn't have the leisure travel to Busch, Disney and the Dali Museum, people taking charters, going to baseball and hockey games, we'd be in a heap of trouble.”
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