Daily News from New York, New York on September 7, 1982 · 37
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Daily News from New York, New York · 37

New York, New York
Issue Date:
Tuesday, September 7, 1982
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) S 37 ) By JOHN HENRY Price-slashing might seem about as out of character for the elegant Helmsley Palace Hotel as a convention of French chefs at a Holiday Inn. Yet over the Fourth of July weekend, the Palace where a single room goes for $135 and up was offering accommodations to its overnight guests at half the usual rate. Spokesmen for the Helmsley Hotels chain say that its flagship unit on Madison Ave. is flourishing and that the price-cutting was part of a company-wide promotion tied to the July 4 birthday of Leona Helmsley, the chain's chief executive. Nevertheless, such a steep discount at a "grand luxe" hotel raised the eyebrows cf some veteran industry observers. Whatever the reason for the Palace's cut, they note it came at a time when the bloom has faded fromjthe boom that carried the lodging industry here to record levels of occupancy just three years ago and prompted the addition of 5,000 rooms. ROOM OCCUPANCY in New York's 40 or so major hotels reportedly still is above the city average for the last decade and well above the current national rate, but it's way below the peak of 81.4 that was reached in 1979. By last year, the rate had tumbled to 72.9 a casualty of the global recession and the strengthening dollar. And so far this year, those two factors have hammered occupancy here down another 5 to 7 percentage points, trade sources say Many hotels hope to recoup at least some lost business in the three months after Labor Day, traditionally the beginning of the industry's busiest period. Operators are banking on an upturn in the economy as well as vigorous efforts to cultivate foreign and U.S. travelers. More competitive pricing is part of the hotels' strategy to fill their rooms. "Average rates definitely have risen more slowly than in the past," says Roy Judge, the assistant to the chairman of the Hilton Hotels chain, which runs the Waldorf-Astoria and New York Hilton here. And, he adds, hotels increasingly are turning to price promotion to lure business. it s down at the Summit, too IWW n a si si n,-s i hs id ? & 2 r J vSi. -yOdOA 4 is ri ii (, - jss. JJ I B R E 3 if p p n ?i n ? ti n r r n ti fi V4 . i. r - 1 $ f - t 1C- & The Plaza Hotel: business is down "Everyone has offered weekend deals, but now there are significantly more deals during the week," Judge says. "Most of the luxury hotels that normally have rates above $100 lowered them during the summer by 20 or more," observes Charles Frowenfeld, the general manager of the Barbizon-Plaza. "Some of the cuts were unusually deep." If the hoped-for rebound does materialize this fall, it will provide happy ending to a year that has produced disappointment within this key segment of the city's $2.1-billion visitor industry. The Plaza is a case in point J. Philip Hughes, the managing director there, expects the best autumn for the venerable luxury hotel in three years, largely because of an extremely strong catering business. But of his overnight trade, he says 1982 "is not as good as we thought it would be before the year began." Occupancy at the Plaza, while still at a respectable 80, is 10 percentage points below last year, he reports. flffE'RE OFF IN all categor- les foreign, reservations, w business reservations. travel agent business," reports Robert Tisch, the president of Loews Corp., whose hotels here include the Regency, Summit, and Howard Johnson's Motor Lodge. Occupancy at the firm's hotels is, like New York hostelries in general, running 5 to 7 points below last year, he says. There may be some exceptions to the down trend: Donald Trump, who converted the old Commodore into the Grand Hyatt, says that despite his competitors' slump, his two-year-old 42d St. hotel has "done well because it's in a location with very few hotels with big banquet and convention facilities." There are conflicting reports about the performance of the Helmsley chain's two new hotels, the Palace and the Harley of New York. Some competitors believe the two-year-old Palace is doing well. But at least one analyst wonders if the Palace's Fourth of July 50 rate cut reflected problems there. "Usually, any true fop-of-the-line hotel wouldn't do that," says Joseph Doyle of the investment firm of Smith Barney, Harris Upham & Co., echoing other observers. "Though a cut for one weekend isn't necessarily indicative, it would suggest they need some business." As for the Harley, a competitor who asks not to be identified, says of the 42d St. hotel, "I hear it's a disaster. The only business it gets is the overflow from the Grand Hyatt." A spokesman for the Helmsley chain scoffs at the suggestion that the Palace is faltering. "I understand the Palace is leading the city in occupancy," he says, noting that the hotel this month is raising its rates by $20 a night on many rooms. At the Harley, which opened in early 1981, Manager Louis Hautzig says, "This is the best summer we ever had 70-80 occupancy on weekdays and 55-60 on weekends. We're doing well above what we expected." SINCE THE Helmsley chain is privately held, determining exactly how well its doing is very difficult. But one thing is certain: the enterprise con- fronts the same business environment as every other hotel operator, and that environment isn't exactly problem-free. Besides the domestic economic slump, the hotels face softness in what for many of them had been the fastest growing part of their business: the foreign traveler. Such traditionally important sources of customers as Canada and Western Europe have serious recessions of their own. A more important depressant is the recent strengthening of the dollar, whose weakness against other currencies in the late 1970s fueled the growth in foreign tourism here. Hotels like the Plaza, which caters heavily to the overseas markets, notice the difference. USINESS FROM MEXICANS. formerly a good source of business for the city's hotels, "is wiped out, finished for the time being," adds Frowenfeld of the Barbizon-Plaza, alluding to the recent plunge of the peso. "They can't even use their credit cards in this country." While the increased price competition that hotels are using to stimulate business may be good for travelers, it is putting more pressure on profit margins. Because of sluggish demand, -operators say they are raising room rates at only a fraction of the increase in their own costs. As they eye their shrinking margins, the hotels here have this consolation: Occupancy nationally is off 10-12 nearly twice the New York rate, according to Loews' Tisch, who is also the chairman of the New York Convention and Visitors Bureau. And the local operators can also console themselves with the belief that time is on the city hotel industry's side. "New York remains the nation's main international gateway city," says Waldorf Managing Director Jorgen Hansen, who notes that more than twice as many foreign visitors come through airports here as in the No. 2 city, Los Angeles. He also discerns a still untapped wanderlust among peo pie everywhere. "Travel," Hansen predicts, "will continue to grow." Needless to say, for the city's hotel operators, his prediction can't come true too soon. X i i t cist4 t , v- What's happening at the Palace? ,1 3

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