San Francisco Hotel News & Labor Updates

Wall Street Journal July 29, 2011 http://online.wsj.com/article/SB10001424053111903591104576468383797139042.html San Francisco’s tourism-reliant businesses, one of the city’s key industries, are enjoying a rebound but no longer believe that 2011 will bring sales back to prerecession levels. Personality Hotels LLC, which runs Hotel Union Square, Hotel Diva and two boutique properties, has raised average daily room rates by 15% to 20% from a year ago, but occupancy has remained flat, said Chief Executive Yvonne Lembi-Detert. “I thought it would have been better than it is,” she said. Her outlook now: “I’m looking forward to 2012.” The city’s tourism industry generally mirrors that of the national economy, and both are recovering more slowly than many had expected. This is a blow to an economic engine for San Francisco that employs tens of thousands of workers and is the city’s biggest industry by tax revenue. In 2010, the city had 15.9 million visitors, who spent $8.34 billion and generated $485 million in tax revenue for the city, according to San Francisco Travel, the city’s primary visitors bureau. That’s up from 2009, when 15.4 million people visited the city and spent $7.8 billion, but still down from 2008, when those respective figures were 16.4 million visitors and $8.5 billion in spending. The tourism bureau’s chief executive, Joe D’Alessandro, predicts that spending will rise this year. He added that the outlook for 2012 is uncertain and could even decline, in part because Moscone Center, the city’s main convention site, will be closed for weeklong stretches for renovations next year. About half of the city’s tourism-related tax revenue comes from the hotel business. Industry tracker Colliers PKF Consulting forecasts that the hotel occupancy rate will rise 2% to 77% this year, compared with 2010, while average daily rates will jump 9.7% to $149.23. Those projections are lower than they were earlier this year, said Thomas Callahan, head of PKF’s West Coast practice. He said the more conservative forecast was “because of all the uncertainty in the economy,” adding that the hotel industry won’t bounce back to its 2008 peak until next year. PKF predicts that in 2012, occupancy will stay level, while the average daily room rate will rise 7.9% to $161.02. The slow rebound is apparent in other tourism-related businesses. Sales at Sinbad’s, a popular restaurant on Pier 2, are flat from last year and down 20% from two years ago, said owner Tom Stinson. Not only is drop-in traffic down from before the recession, but people are spending less, he said. Mr. Stinson had hoped that business would pick up in the spring, but now believes it will take several more months to “ride the storm out.” Mr. D’Alessandro, of San Francisco Travel, said the industry this year had actually surpassed his expectations; the travel bureau had predicted a drop. The bulk of the growth comes from foreign tourists, who make up roughly one-third of the city’s visitors. He said there are especially more travelers from Asian countries. “It’s very significant,” Mr. D’Alessandro said. “International visitors tend to stay longer and they tend to spend more.” Any economic struggles weren’t obvious on Fisherman’s Wharf on a recent Sunday. Tourists struggled to stay on crowded sidewalks while throngs watched street magicians and gobbled down cookies from Boudin Sourdough Bakery & Café. “It’s still a popular tourist destination, tons of people still out, [though] maybe not spending as much,” said Rodney Fong, president of the Wax Museum at Fisherman’s Wharf. Mr. Fong said the museum’s ticket sales were down very slightly from last year and off 4% from two years earlier. He said business could have been worse off it weren’t for a big uptick in California visitors. “It’s not that bad,” he said. At Scoma’s Restaurant a couple blocks away, Mariann Costello echoed that feeling. The seafood restaurant posted flat revenue last year, but it’s now up 5%, said Ms. Costello, the restaurant’s vice president. She said Scoma’s wasn’t quite back to the peak of 2008, but that it wasn’t too far off. “We would have liked to have gotten back to pre-recession numbers, but it’s not unexpected, given the economy that surrounds us,” she said. [...]

Houston Business Journal July 26, 2011 http://www.bizjournals.com/houston/blog/2011/07/san-francisco-firm-eyes-houston-hotel.html A well-established San Francisco hospitality company is looking to develop, acquire and manage hotels in Houston. Kimpton Hotels & RestaurantsbizWatch , which focuses on upper-priced and boutique hotels, is seeking business opportunities in all major Texas markets after its success in managing two Dallas-area hotels. The Dallas Business Journal wrote about the expansion plans in the July 22 issue. “We buy a building and develop a hotel, or buy an existing hotel and convert it to a Kimpton hotel,” Niki Leondakis, Kimpton’s president and COO, told the newspaper. “That’s one way we grow and develop. The other is through pure management contracts for third-party owners.” The 30-year-old company currently operates more than 50 hotels in 18 states. Management companies typically land new contracts when a hotel sells or is rebranded, according to Randy McCaslin, vice president with San Francisco-based PKF ConsultingbizWatch , which owns PKF Hospitality Research. It may be a good time for the hotel operator to consider Houston, since the latest performance data on upper-priced hotels in the Houston area is better than it has been for years. PKF Hospitality Research reported the city’s upper-priced hotels had a 67.3 percent occupancy rate in the first quarter, the latest data available. The last time the figure was that high was when the annual occupancy rate reached 69.1 percent in 2008. The average daily room rate at upper-priced hotels in the first quarter was $129.26 in Houston. The last time it reached that level was in second-quarter 2009, when it was $131.19. Finally, PKF reported the local revenue per available room was $86.99 in the upper-priced category in the first quarter. We have to go back to the annual 2008 RevPAR figure of $98.90 to beat that. So keep an eye out for Kimpton as it muscles its way into the Houston market. [...]

The Bay Citizen July 22, 2011 http://www.baycitizen.org/labor/story/police-arrest-dozens-protesters-front/ San Francisco police arrested dozens of protesters Thursday evening following a demonstration in front of the Grand Hyatt Union Square. The union representing the hotel’s workers organized the protest, one of eight demonstrations against the chain across the nation. A UNITE HERE Local 2 press release said the events sought to “end the abuses” faced by Hyatt workers, including the replacement of long-term employees with lower-paid temporary workers. “This is all because Hyatt has singled itself out as the worst of the worst,” said Ian Lewis, research director for Local 2. “At this hotel, we’ve been fighting for a contract for two years.” Hundreds of people crowded the sidewalk, marching, holding signs and chanting slogans. Hyatt spokesman Pete Hillan said nearly 100 police officers were required to manage the crowd. Officers used Muni buses to take the demonstrators to jail. As the buses pulled away, protesters continued to chant, calling for a contract. “This is all street theater,” Hillan said. “Over the last 18 months, we’ve seen it all.” Hillan said Hyatt has already offered the workers a contract on par with those at other local hotels. “We’re sitting here with pen poised,” Hillan said. “Our question is why Local 2 holds its membership hostage to a national agenda.” Cynthia Reeb, a Local 2 member and switchboard operator for the nearby Hyatt Regency, said a suitable contract would provide fair wages, health care and job security. “We only want what’s fair,” Reeb said. “We’re asking people to understand that this isn’t just our problem. It’s an American problem.”   [...]

San Jose Mercury News July 20, 2011 http://www.mercurynews.com/san-mateo-county/ci_18509995 Foster City voters will decide in November whether to raise the tax on the city’s two hotels from 8 percent to 9.5 percent. On Monday night, the Foster City council approved placing a measure on the ballot to increase the city’s transient-occupancy tax by 1.5 percent, as city officials look to close a $2.8 million structural deficit. The city’s hotel tax brings in nearly $1.3 million a year in revenue, according to city staff. Boosting the tax rate would increase that amount by $325,000. Even at 9.5 percent, Foster City’s hotel tax rate would be the lowest in San Mateo County. The second-lowest rate, 10 percent, is in effect in such cities as Belmont and South San Francisco. Burlingame, Millbrae and San Mateo are among the cities with rates of 12 percent. Because they were considering a tax increase, four out of five council members needed to vote in favor of the measure for it to pass. Councilman Charlie Bronitsky provided the fourth vote, extracting a concession to lower the proposed rate to 9.5 percent from 10 percent, the level suggested by city staffers. Bronitsky, who has stated his opposition to tax increases in the past, said Tuesday that keeping Foster City’s rate lower than that of surrounding cities was essential to his support. The Chamber of Commerce told city officials the higher rate would not put the city’s hotels, the Crowne Plaza and Courtyard by Marriott, at a competitive disadvantage, he noted. “Having given it some additional thought over time, I don’t think it’s an unreasonable solution,” he said, noting that the city last month raised many fees for basic services more than 1.5 percent. Councilman Rick Wykoff cast the lone vote against the proposal. He said Tuesday the city hasn’t done enough to cut spending to justify increasing taxes. “I don’t think we were as aggressive as we should have been in reducing expenditures,” Wykoff said. The hotel tax hike will need approval from a simple majority of voters to pass. In other business, the council instructed staffers to produce a report on whether to ban the use of plastic-foam takeout containers by Foster City eateries. San Mateo County recently adopted a polystyrene ban for its unincorporated areas. Burlingame is among cities in the region that have enacted such a ban. [...]