Name: Robert Slater
Age: 55
Position: Chairman of the American Hotel & Motel Association based in Washington, D.C., and president of Southern Hospitality Inc. in Oklahoma City, Okla.
Background: Founded Southern Hospitality in 1986. Today the company operates 14 lodging properties, including Doubletree, Radisson and Holiday Inn hotels in 11 states. Prior to forming the company, he was president and chief operating officer of GM Hospitality Inc., a lodging, management, development and consulting firm.
Education: Bachelor’s degree in business administration from St. Mary’s University in San Antonio, Texas.
Family: Married with two children.
Residence: Oklahoma City, Okla.
ROBERT SLATER: ‘Nationally we’ve had reord revenues and record profits.’
PBN: The hotel occupancy rate in Rhode Island has been the highest in New England at about 87 percent, according to Smith Travel Research. Hotel rates are among the highest in the region as well. How does this square with the national trends?
SLATER: Well, nationally, we’ve had record revenues and record profits. Last year was the highest ever in our history, and this year will probably be the same. Ironically, occupancies have been dropping, which is due to supply and demand. With those kind of record profits in a free market economy, where there is perceived to be a void, it gets filled.
So hotel developers are overbuilding?
Yeah. From a national standpoint, you are seeing supply increasing faster than demand. However, room rates are increasing higher than inflation. So the key number for us is revenue per available room. (Revenue per available room is calculated by dividing a hotel’s revenue by its number of rooms.) That number is a number that you can pretty easily calculate because you know what the available rooms are so you can make kind of an easy comparison. You can have a high rate but you can be running a low occupancy. The common denominator to make comparisons to your competitors is revenue per available room.
What is the trend in revenue per available room nationally?
It’s up, which means that rates are increasing faster than the number of available rooms, which is offsetting that trend (of overbuilding). That’s why we have had record revenues and record profits.
What is driving the increase in room rates?
What’s driving that is that the demand is increasing. Even though supply is increasing, demand is increasing more. The economy is kind of driving that. We’re not in a recession.
So the hot economy means more business travel and, thus, more demand for hotel rooms. What about pleasure travel?
Pleasure travel is increasing too. It used to be that you’d say you could shoot a cannon off in the hotel and not hit anybody on the weekends, but that’s not the case anymore. In some cases some hotels’ occupancies are higher on the weekends than they are during the weekdays.
Would you say that the gamut of hotels sizes from the small motels to the high-rise hotels are mostly all experiencing higher revenue per available room?
Yes, I would say generally that’s so. The revenue for the total industry was record last year, and it is projected to be the same for this coming year. So, in the broad brush, our industry is moving, it’s been the best that it has ever been in our history. Can all of that continue on? That’s the big $64,000 question. Are we going to have a recession? The answer is probably someday we probably will. When you start getting that, leisure travel is one of the first things that drops off because it’s easy to cut that.
Have real estate investment trusts played a role in the overbuilding?
Really it’s just the opposite. In the last couple of years, they were really driving the growth and acquisitions because the REITs were the hot thing. Their bubble got busted, probably last year. Even though there are some that are doing some selective acquisitions, they are really not on the radar screen. The acquisitions have slowed down considerably. The REITs are not much of a player right now.
Has there been much of a push to unionize hotel workers nationally?
There are some selected markets–for instance, New York City–that are unionized. Las Vegas and San Francisco too. There are some markets, but I would say generally that’s not one of our concerns right now. If you happen to be in a city that’s unionized, then certainly it’s very much a concern. Fortunately they haven’t really targeted our industry as one they’re going after. That doesn’t mean it couldn’t happen.
What other trends have you noticed in the hotel industry?
Well, one of the things on my agenda for this year is to change our name from the American Hotel & Motel Association to the American Lodging Association. The basis behind that is our industry has been constantly changing. When I first got in the business you were a Holiday Inn or a Ramada. There was hardly any segmentation. In the ’80s we started differentiating products like Holiday Inn, Holiday Inn Express and Hampton Inn. All of the sudden you’re not just a Holiday Inn. There’s all of these different segments: full service, limited service, economy. In the ’90s you started getting extended-stay and all-suites properties. Now time-shares are becoming a very important part of our industry. Our industry is constantly changing. That’s what you try to do in a free market, go in and find a niche and exploit that niche and make a market out of it. From a national association basis, my concern is to make sure that no matter how our industry changes and evolves over time we speak with one voice for the lodging industry. We don’t want the voice to be fragmented because one of the primary functions we have as a national trade association is representing ourselves in Washington, D.C., making sure we have a strong representation there.
What are your lobbyists on Capitol Hill working on right now?
Well, we’ve got a laundry list of items. We’ve got our Legislative Action Summit from Feb. 29 to March 1. We will bring in hoteliers from all around the country, and we’ll try to narrow it down to three issues. Last year, one of our three issues was federal per diem (the amount the federal government will reimburse its employees for food and lodging when they travel on business). It had been reduced, and that can be very devastating for us. But the person that really suffers is the federal traveler because they have to stay in substandard type of lodging that really they shouldn’t be forced to do. That was one of our issues when we marched up on the Hill. After we did that there were 50 Congressional inquiries into it. And now federal per diem in Boston went from like $139 to $189 a night.
How much would you say the per diem increases meant to the industry?
We’re talking millions and millions of dollars.
And this year?
We haven’t quite defined what the issues are going to be, but I suspect that there will be one on ergonomics. That could be a terrible thing for not only our industry, but any industry that has repetitive type of motions. OSHA (Occupational Safety and Health Administration) had some proposed regulations. You can imagine what a tremendous impact that could have. We are absolutely opposed to the implementation of those broad-based regulations until a Congressional study to determine what are the real issues is done.
What else?
Immigration policy. If you ask me what I thought the number one issue that is facing our industry today, I’d have to say the shortage of labor. Here in Rhode Island the labor force in the hospitality industry is expected, as I understand it, to increase by 17 percent per year. That is a tremendous amount of growth, and we have to have the labor force to keep up with that. We have a task force to see how do we attract and retain employees to our industry. The immigration policy is kind of a subset of that. We want to make sure our immigration policies are not restrictive, that they allow people to come in and work in the United States. There are some great hotel and restaurant schools in Europe as you can imagine. And we have some immigration vehicles for them to come in, but they are so narrowly interpreted that the quotas are 25 percent of what they could be.
Given the lack of labor you cite, have hoteliers increased what they pay?
Absolutely. That’s why I think the minimum wage issue is a red herring in a way. We are all paying over minimum wage. What’s of more concern is this living wage issue. That’s where it could be a real problem for our industry. To have the wage structure mandated nationally? The market really sets it. Yeah, you are going to pay minimum wage or else you are going to sit there with a bunch of empty hotel rooms.
Times are good now, though. What about in a time of recession?
I don’t think you can get anybody in the New England area for minimum wage. I just don’t think that’s an issue.
