One Year After Katrina, Market Challenges Remain

By Staff -- HOTELS Magazine, 9/1/2006

NEW ORLEANS A year after Hurricane Katrina pounded New Orleans and the Gulf Coast, the future of the two markets remains uncertain. In New Orleans, 103 of 140 metropolitan area hotels, representing more than 27,300 rooms out of a pre-Katrina total of 38,000, were open in August. Yet citywide occupancy was hovering around 50%. Meanwhile, on the Gulf Coast, a much smaller number of hotels are open, causing high occupancy in those that are. But outside of construction, not much is happening around them. “If you look along the coast where there used to be multi-million dollar homes and lines of businesses, it’s nothing— there’s nothing going on,” says David Kong, CEO of Best Western International, who recently visited the area, home to a number of Best Western properties. “Where is the business going to come from? Who wants to go to the beach when there are no shops to shop in and nothing worth looking at? All you have is the casinos.”

The two markets face different dilemmas. In New Orleans, the main tourist areas—downtown, the French Quarter and the Garden District—along with many of the attractions are open for business; it’s just a matter of getting the word out and changing people’s perceptions (news of crime and an onslaught of media attention surrounding the U.S. National Guard being deployed in the metropolitan area have not been welcoming messages for potential visitors). For the Gulf Coast, rebuilding is the challenge—many hotels have not been able to reopen because they aren’t getting any money from the insurance companies. “The basic problem is the insurance companies don’t want to pay,” Kong says. “They want FEMA to pay. It’s a difficult situation—it’s going to take years for those areas to come back.”

Staffing A Challenge
“Everybody’s still looking for solid, committed associates,” says Mark Kucera, executive vice president of operations for Expotel Hospitality Services LLC, which owns the Best Western New Orleans Inn at the Airport. “We are at a point where we’re physically able to operate the hotel and maintain a core level of service, but we’re just not at the position where we’d like to be. There’s just not the pool of candidates that there was pre-Katrina.” On top of that, wages for hourly workers in New Orleans have increased significantly as the labor supply has tightened. Rosie Lowe, general manager of the Best Western Seaway, Gulfport, Mississippi, has similar concerns, especially with the large casino hotels reopening nearby. “Every time a casino opens we all hold our breath and wonder how many employees we will lose,” she says.

Still, despite each market’s challenges, the people working there maintain a positive perspective and believe the destinations can come back. For example, the New Orleans Metropolitan Convention & Visitors Bureau has formed a public relations council bringing together members of local tourism organizations and facilities, including hoteliers, for weekly meetings about marketing the city and getting the message out that New Orleans is welcoming guests with open arms. “That good old southern hospitality and charm has only gotten better,” says Mark Sanders, area general manager of the Marriott Hotels of New Orleans. “Staff and associates are that much more engaged. There is an understanding of the value of a visitor.” Sanders is not overly worried about the slow summer for the hotel business—summertime in New Orleans has always been a hard sell, he says. And despite a number of convention cancellations and now much of the post-hurricane contract business having departed, he sees opportunities elsewhere, such as smaller corporate groups.

“From a sales perspective, [cancellations] have opened up dates and space that is not typically available. We are very appealing to customers with short-term needs,” Sanders says. “New Orleans is providing great values. Dollars go much further here than in your New Yorks, San Franciscos or Orlandos.” Plus, conventions have begun to get back on track, with the American Library Association bringing 18,000 visitors to the city, most of whom had positive things to say about the service and hospitality. “Every guest that comes for a meeting or convention turns out to be an ambassador for us,” Sanders says. “That word-of-mouth is far stronger than any campaign we can put out there.”  The word-of-mouth and marketing efforts are key to securing the future of a market still suffering from uncertain tourists and nervous meeting planners. Getting through the end of this hurricane season should help as well. “Expect 2007 to be a lot better,” Sanders says. “In the fourth quarter [of this year] we’ll see strength coming back. We already have first quarter [2007] bookings coming in, and throughout 2007 it will continue to build—it’s just going to take a little time.”

Kelly Schulz, spokeswoman for the New Orleans Metropolitan Convention & Visitors Bureau, sums it up simply: “It’s time to bury Katrina and move on from the heartaches and the devastation, and celebrate what we do have here. We want to look forward, to look at rebirth and renewal, and having a future full of possibilities.”