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Hotelland: suite frills or frugalities.

Hotelland: Suite Frills or Frugalities

Keen competition for both the business and pleasure traveler has forced hotel and motel chains to alter their marketing philosophies and step into a competitor's territory with lodging products catered to specialized markets. Chains such as the Ramada and the Radisson here in Manitoba have segmented their products to specifically meet the needs of the various market tiers: executive travel, sales seminars, conventions, annual meetings, groups and tourist markets.

For example, Ramada, which for years at its Pembina Highway location catered to the budget or mid-priced traveler, announced, through Lakeview Development of Canada Ltd., plans for an upscale, executive-oriented Ramada Renaissance all-suite hotel at the east end of the Portage Place complex. And Raddison, which arrived in Winnipeg earlier this year with its all-suite property at the Lakeview Airport Executive Centre, has added to its upscale image "limited service", mid-priced facilities in Winnipeg and Thompson under the corporate name Country Hospitality Inns.

"The three basic categories still remain, it's just that the hotels have changed a bit," explains Manitoba Hotel Association president John Read. "For example, the downtown hotels cater primarily to the business traveler on full expense account. Several have executive/concierge floors with all the extras seasoned travelers have come to expect.

"But there are new players that are upgrading and changing the image of the old motel concept," he adds. "Facilities like Journey's End and Country Inns offer quality accommodation with few frills or on-site services."

In the eyes of one major hotel developer, these changes are a result of recognizing and meeting market demands. "We saw various market gaps in the industry and filled them," says Keith Levit, vice-president of Lakeview Development. "If you could build any project economically, you would. We're very high on the hospitality industry in Manitoba and see no reason why projects like the ones we are developing should not proceed."

But not everyone in the industry shares Levit's enthusiasm or supports his reasoning for the current spate of activity. Competition in the middle-to-high end market is very heated. Most downtown hotels, for example, have either recently completed renovation/expansion programs or have plans for some major capital expenditure.

A multi-million-dollar renovation, scheduled for completion this September, is underway at the Holiday Inn Winnipeg Downtown. The current renovations complement those undertaken two years ago to the hotel's restaurants, lounge and main lobby areas, at the cost of $2.5 million. Total coast of renovations will exceed $10 million.

Perhaps the most exciting feature is the addition of the Executive Club, located on the hotel's 12th floor, which opened in early July. The Executive Club will appeal to business travellers who desire the finest accommodations with additional services, or who simply want more privacy, finding the limited access Executive Club ideally suited to their needs. Special features of the club include complimentary in-room coffee service, evening turndown service and in-room mini-bar.

"Our renovations reflect the ongoing commitment to provide our guests with the very best service, amenities and facilities available within the city of Winnipeg," says Alan Phillips, the hotel's general manager. "All the business and leisure needs of our customers will be accommodated through these and our other excellent facilities."

Occupancy levels here have remained constant over the past few years, hovering between 60 and 70 per cent. And, says the MHA's Read, "this is not likely to increase in the future. In fact, it is quite likely that the vacancy rate will become lower if new properties come on stream as planned. There are over 1,000 new rooms scheduled to come on stream in the next few years without a foreseeable increase in business or tourist traffic."

Levit, however, is undaunted, even though he is aware of the concerns of the Hotel Association. "Competition forces everyone in the industry to upgrade their product, which, as far as we are concerned, is a positive trend. Our hotels do not cater to one specific market. For example, we'll be the only all-suite hotel downtown (when the Ramada Renaissance is built), and while it may take customers away from other properties, it should also create a new image for the core area and thereby attract more business."

According to a recent study on the financial viability of Manitoba's hotel industry conducted by the consulting firm Peat Marwick Stevenson & Kellogg, the problems go much deeper than the potential problems caused by the construction of few new properties. "The analysis we did," says Ron Hickel, a partner in the firm, "showed that in 1988 the Manitoba hotel industry experienced serious financial difficulties relative to its historic performance. During that year, the hotels in this province had an average net loss of $29,604."

The same survey shows that in 1987 the province's hotels, on average, had a net profit of $92,000. During the course of 1989, some 26 hotels went into receiveship, were foreclosed or voluntarily closed their doors, the report says. "The profit picture is particularly grim for small hotels," adds Hickel, "those properties with 20 rooms or less. A substantial number of these hotels are located in rural areas."

Hickel says that there is a substantial need for restructuring the Manitoba hotel sector if it is to survive and be profitable in the future. "This is going to require investments and some acts of faith. It's very hard for many hoteliers, particularly those who are not affilated with chains or are not part of a national or international operation, to raise dollars required to make the investment to change the ranges of services in the physical plan that is offered."

Once again, Keith Levit and Lakeview are unyielding in their optimism over the future of the industry in Manitoba, particularly outside the city of Winnipeg where several projects are underway or planned. He points to the recently completed 62-room Country Hospitality Inn in Thompson, a 78-room Country Inn which is planned for The Pas in early 1991 and the possibility of yet another in Morden. "These communities all are in need of first-class hotel facilities and, once again, we are filling the market need."

He is particularly proud of another rural Manitoba project, the Country Hospitality Resort, now under construction in Gimli. The four-storey, 77-room complex will be the showcase in a major revitalization venture underway in this Icelandic community on the west shore of Lake Winnipeg. Approximately one-half of the guestrooms will be two-room suites with a bedroom and living room (in keeping with the policy set down by the Country Hospitality Inns), featuring a wet bar and microwave. The hotel will also feature full-service amenities and facilities including restaurant, lounge, indoor pool, jacuzzi and sauna, sun deck and full meeting/convention facilities. Contruction is expected to be completed by June, 1991.

Suites are one of the fastest-growing lodging segments in Manitoba, a trend that MHA's Read says will likely continue in the future. "The traveler staying several days in the city will likely find this type of accommodation more appealing than the overnight guest. While it is a popular trend at the moment, I don't necessarily see every new property coming on the market being of the all-suite variety. I don't think we have the market for that here."

But Lakeview's Levit says the suite market has gained great acceptance, primarily because it is perceived by the traveler as having a better price/value relationship than other types of lodging, with the assumption of receiving two rooms for the price of one.

The recently opened Radisson Hotel is proof that the all-suite property is popular with visitors to Winnipeg, as occupancy during the spring months (traditionally a slow period for hoteliers) was an impressive 70 per cent. With this in mind, Levit anticipates similar success when the 242-all-suite Ramada Renaissance opens at the east end of the North Portage Development in January, 1992.
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Title Annotation:hotels in Manitoba
Author:Bain, Donald
Publication:Manitoba Business
Date:Sep 1, 1990
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