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Bed battles.

Too many hotel rooms and not enough bodies, and where are the Americans?

WINNIPEG SHARED IN A TOURISM UPSURGE A DECADE AGO WHEN NORTH AMERICA BECAME A DEStination market for a global travelling population. What ensued was a frenetic building of hotel and a "battle of the brands" as hotel properties vied to outmarket the competition with rock-bottom room rates, and incentives like complimentary breakfasts and free accommodation for kids.

Then, the boom went bust. The bottom fell out of the market as the combined effects of the recession and the Gulf War aftermath caused tourism to take a worldwide nose dive. Many hotels, like Winnipeg's Fort Garry and the Ramada, were forced into receivership. The glut of rooms is expected to last four to seven years.

In Winnipeg, occupancy levels have only recently started to rise following a downward spiraling trend over the last few years. In fact, occupancy levels this spring were up a robust 8.5 per cent over last year. But room rates, which also plummeted during the same period, haven't kept pace with the rise in occupancy levels. As Bob Sparrow, general manager of the Norwood Hotel describes the situation -- "It's a bed war with a downward push on average daily rates."

Like gas wars, bed wars result in hoteliers quickly adjusting rates to undercut the competition. Sparrow says some of his U.S. clients were recently contacted by sales people from two of the largest downtown Winnipeg hotels. "Their (the downtown properties') rates were less than ours," he says of his 70-room hotel. "That's a real statement about how desperate it's getting."

Sparrow, who cleverly markets his St. Boniface property as the "Inn in the Historic French Quarter of Winnipeg," says because margins are low and operating costs are high the financial position of many hoteliers is dismal.

Leo Ledohowski, president and CEO of Hospitality Corporation of Manitoba Inc. which manages four Winnipeg properties, says increasing administrative costs are the bugbear. "Last year my business taxes at the Windsor Park Inn went up over 100 per cent."

Beyond rates, hotels are also trying to outdo each other on the amenities front with all manner of enticing offers to coax travellers through the door.

Winnipeg's Delta Hotel general manager, Eduard De Van Der Schueren, says, "The product is basically the same in all hotels so you have to compete in amenities." The Delta has taken an aggressive marketing approach to cater to the family market by offering free rooms to kids under 18, and free parking.

Perhaps the king of offering his guests a big hospitality bang for the buck is George Gershman, outspoken general manager of the Charter House Hotel and former chairman of the Manitoba Hotel Association. Gershman widely advertises discounted room rates and dinners in the Charter House's famous Rib Room. The reasonable rates, coupled with a full-meal deal and down-home, friendly service in the Rib Room, are the epitome of good basic value.

Gershman's voice almost breaks when he recollects that between 1983 and 1989, 39 bus tours from small American towns booked into the Charter House for weekend trips. "I gave them the red carpet treatment," says Gershman. "Shopping trips to factories, Stage West tickets, admission to the race track and discounts in the Rib Room." Last year, not one tour bus pulled up to the lobby's front doors. Gershman blames the dearth of group travel partly on the recession and partly on the huge price differential between having a good time in Winnipeg compared with American cities.

Like Gershman, Winnipeg hoteliers are wise to stay in touch with the changing nature of their consumer. Whether a business traveller conscious of corporate belt-tightening or a holidaying family on a budget, the hotel guest of the '90s is demanding value for their dollar. Michele Maskelle, general manager of the Westin Winnipeg, says their attitude is exemplified in: "Give me what I want and don't rip me off."

While Winnipeg's larger hotel properties depend on the business traveller for their bread and butter, the tourist sector can contribute significantly to occupancy levels -- and ultimately to the bottom line. But the lucrative American tourist market has virtually dried up over the last few years. The implementation of the GST, the stronger Canadian dollar and the increased taxation of liquor and cigarettes have had a collective impact.

Ledohowski claims the number of Americans who visited Winnipeg last year was the lowest since 1959. He is critical of government's relentless taxation of the luxury items that are key to a thriving tourist industry. "All the advertising in the world isn't going to attract Americans who are overwhelmed by our taxation on booze, gas and smokes," he says.

Joe Paletta, whose family owns several hotels, echoes Ledohowski's sentiments. He laments that Americans from the states hugging the Canadian border, who used to gamble in Winnipeg, are now staying in cities like Fargo, North Dakota to do it. Paletta believes that government should put more money into the development of entertainment facilities to cater to the American penchant for playing the tables.

In terms of drawing major convention groups into the city, many hoteliers are critical of the marketing efforts of the Winnipeg Convention Centre. George Gershman believes that too much emphasis is placed on the upgrading of the Convention Centre's facilities when the real issue is that the Centre's personnel are doing a substandard sales job. He points to the dismal 1993 convention year as evidence of the Centre's flagging efforts.

The Delta's De Van Der Schueren agrees. "They're not doing a great sales job. The excuse that the Convention Centre is not adequate is just not good enough when you look what other cities have to offer. Our product is good."

The recent announcement that the Convention Centre is taking over the management of food and beverage services at the Fort Garry Hotel has hoteliers incensed. The concensus is that because the Centre doesn't pay business or realty taxes (as it is subsidized by the city), it shouldn't compete with hotels in the catering arena.

John Read, president of the Manitoba Hotel Association, says the tax dollars subsidizing the Convention Centre are coming from businesses competing with the Centre. "The Centre's primary function is to bring conventions into the city. They've lost their focus."

But Convention Centre general manager, Scott Walker, claims the city's subsidies don't provide enough revenue to fulfill the Convention Centre's mandate -- and pay the bills. Walker would rather compete in the open market than see taxes hiked on local businesses.

Hoteliers seem cautiously optimistic about the future. While rates have been in a tailspin, most believe they have bottomed out. Average occupancies are up year-to-date in 1992 and rates are expected to slowly recover.

But it will be difficult to hike room rates to the levels of a few year's ago. Holiday Inn Crowne Plaza general manager, Alan Phillips, says, "We've been shortsighted (in bringing rates down so much) and it jeopardizes the rates we can charge in the long term. It will be difficult to go from $59 to $81."

The Holiday Inn has tapped into a North American broadcast PBS program that asks viewers, "Where in the world is Winnipeg?" Phillips hopes this campaign will net him an extra 3,500 room nights.

Janis Connolly is the editor of The Praire Hotelier and a freelance writer.

How Suite It Is

While other hoteliers are realizing modest revenues as operating costs soar and rates plummet, Winnipeg's Country Inns & Suites would appear to be an extraordinary success story. Operated by C.H. Inns & Suites, the all-suite hotel near the airport was recently awarded the "Highest Occupancy" award in the parent company's (Country Lodging by Carlson, Inc.) rapidly expanding chain.

The Winnipeg property's year-to-date occupancy level at the end of last May stood at an astonishing 89.3 per cent, according to Joyce Peterson, vice-president of C.H. Inns & Suites. The rest of the industry in Winnipeg looked on jealously with a collective average year-to-date figure of just over 56 per cent.

Local hoteliers have coined the phrase "funny money" to describe the funding for this development which they say is questionable at best given the current glut of hotel rooms on the market. "It's just not market driven," complains Hospitality Corporation's Ledohowski.

But who can argue with success! Peterson says providing a marketbasket of amenities at an affordable price is the secret. These amenities include a free continental breakfast, all day coffee, free movies, mini bar and space -- two room suites with king-size beds, wet bar and microwave.

The company is in the middle of an unprecedented building frenzy. "In 1990 we opened six new hotels," claims Peterson. The chain is presently concentrating development in the Maritimes, Manitoba and the U.S. states that border on Manitoba. The building projected over the next 10 years in phenomenal: 120 hotels in Canada and Florida, says Peterson.

C.H. Inns & Suites is a sister company of Lakeview Development of Canada Ltd., a company whose hotel development is fueled by the immigrant investor program.
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Title Annotation:includes related article on Winnipeg's Country Inns & Suites; hotel occupancy in Winnipeg, Manitoba
Author:Connolly, Janis
Publication:Manitoba Business
Article Type:Cover Story
Date:Sep 1, 1992
Previous Article:Success in the west: Manitoba.
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