The owners of the Hyatt Regency Jacksonville in Florida missed payments again on its mortgage. Even they had the help from Hyatt Hotels Corp. Last year, when the ownership group led by Charters Lodging Group LLC could not pay for the $150 million mortgages, Hyatt offered $5 million in assistance. In return, Charters let Hyatt manage the 966-room hotel. But the payment of mortgage is still a big problem. According to Realpoint, the hotel’s occupancy dropped from 61% in 2008 to 52% last year. Its net cash flow declined from $10.9 million in 2008 to $4.2 million last year.
The big economic crisis mandates that the owners of the Jacksonville Hotel must change their ways to run the hotel. They can choose to sell the hotel at a low price to others, or, they can take a risk to change the hotel as if to start a new one. If they can finally find a way to cut down th cost and create more revenue, it will be so helpful. All in all, there are some big issues while they run the hotel. They must find them out and solve them.
For the hotel owners who just start this business, we need to be careful when we are going to martgage from the bank. As the econimic is going through a really bad time, the situation is hard for all the new business owners.
link: http://online.wsj.com/article/SB10001424052748704421104575463970323876954.html?mod=WSJ_Hospitality_leftHeadlines
Although it is important to know how this will effect new business owners and entrepreneurs, how will this rise in mortgage rates affect other businesses and hotels? Also, what are some potential ways the hotel can cut down on cost in order to create more revenue? Overall you have a good summary of the article and trend.
ReplyDeleteI believe you did a great job summarizing the article. However, since hotel occupancy is going to rise next year, I don't think that selling the hotel at a low price would be beneficial to them. Your second proposal sounds like a more promising plan. Taking a risk to change the hotel as if to start a new one means renovations, up to date services, and a new staff for better customer service. Knowing that their clientele is going to be incresing in the up coming year, they should be ready to provide satisfacoty guest experience.
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