Celebrating Forty Years of HOTELS Magazine: 1990s

By Staff -- Hotels, 8/1/2006

Innovation, Deals And Development

It was the worst of times, it was the best of times. So went hotel business cycles in the 1990s. Early on, travel and tourism were affected greatly by the Gulf War, and with occupancy down, rate wars broke out in many U.S. markets. The recession that followed resulted in record low financials, and many U.S. hotels faced bankruptcy and foreclosure. But Horst Schulze was right when he said in 1991, “We’ve been in recessions before, and we’ve come out of them. We’ll come out of this current one. And I’ve got news for you: We’ll have another recession sometime in the future. But you can’t stop doing business because there is a recession.”

True to form, hotels did not stop doing business, but rather kept innovating with Westin providing in-room voicemail, Kimpton going pet-friendly and Best Western launching the industry’s first group rate program. HOTELS was innovating as well, pioneering the Global Hoteliers Club, made up of hoteliers who had worked on at least three continents, with charter members such as Ray Bickson, David McMillan, Peter Borer and J.T. Kuhlman.

These personalities were keeping abreast of global industry news, some of which was similar to today’s news, with Dubai expecting a 53% increase in rooms by the end of 1993. Other happenings included Marriott dividing operations into Marriott International and Host Marriott, and the MGM Grand opening in Las Vegas with more than 5,000 rooms, making it the largest hotel in the world at the time. Another property of note, Atlantis, opened on Paradise Island in the Bahamas. And in Asia, high-rise hotels were being built, and Western dining concepts were on their way.

Speaking of food and beverage operations, celebrity chefs such as Emeril Lagasse and Wolfgang Puck stormed onto the scene as mega resorts expanded in Las Vegas and worldwide. Of course, the mid- to late ’90s also marked the rise of technology, with travelers beginning to embrace the Internet and the availability of hotel Web sites and online reservations.

As for the major deals and headlines, things got started in 1995 when Starwood acquired the Westin brand and Marriott acquired half-interest in the Ritz-Carlton Hotel Co. From there, Starwood bought ITT and Hilton acquired Bally Entertainment Corp. Next Marriott went after Renaissance Hotel Group and Carlson acquired Regent International Hotel from Four Seasons. The big finale occurred in 1999 when Hilton Hotels Corp. grabbed the Embassy Suites, Doubletree, Hampton and Homewood Suites brands from Promus Hotel Corp. in a US$3.7 billion deal.

What else happened in the late ’90s? Well, Barry Sternlicht at Starwood took the boutique segment mainstream with the introduction of the W brand, and at the same time, started the bed wars by coming to market with the Westin Heavenly Bed. Things were going swimmingly in the United States, with 1998 marking the beginning of three years of record profits for the hotel industry. But in Asia, hotels were hit hard by the economic downturn around that time as businessmen traveled less frequently and booked shorter stays, looking to cut costs.

Finally, in terms of market segments, budget hotels had become the industry’s leading moneymakers, but all-suite and extended-stay concepts were on the rise. And don’t forget vacation ownership, which was booming with some 5 million members.

1990: Bass Plc buys the Holiday Inn Worldwide system, becoming the parent of the world’s largest hotel chain; Holiday headquarters moved to Atlanta

1990: Accor acquires the 550-property Motel 6 chain

1990: Quality International changes its name to Choice Hotels International and buys the 615-property Econo Lodge chain for about US$60 million

1990: Hilton Hotels Corp. and Hilton International launch joint advertising efforts

1990: Paris’ Hotel Ritz undergoes US$150 million redesign

1990: Low cost and high guest appeal make pizza a popular menu item in hotel restaurants as well as on roomservice menus worldwide

1991: Gulf War slows travel & tourism; U.S. occupancy bottoms out in low 60% range, and room rate wars break out in many U.S. markets

1991: Recession results in lowest financial record in hotel history, with the majority of hotels not meeting debt service, leading to a rash of foreclosures and bankruptcy

1991: Westin is the first hotel chain to provide in-room voicemail

1991: Hoteliers worldwide are looking at ways to cater to female business travelers and Japanese guests

1991: Low-fat, low-calorie light and healthy cooking becomes popular and appears on hotel menus, leading to healthy sales

1991: HOTELS begins Global Hoteliers Club. Charter members include such names as Raymond Bickson, David McMillan, Peter Borer and J.T. Kuhlman

1992: U.S. hotel industry breaks even financially after six consecutive years of losses

1992: Five 5-star hotels are under construction in the United Arab Emirates, with Dubai expecting a 53% increase in rooms by the end of 1993

1992: Hilton International launches Wa No Kutsurogi (harmony and comfort) service for Japanese guests, which includes hotel information in Japanese, traditional food selection and slippers

1992: Kimpton sets up “pet friendly” programs at all hotels

1992-1993: Marriott divides operations into Marriott International and Host Marriott Corp.

1993: Radisson Hotels Worldwide is the first to offer business-class rooms

1993: Best Western launches the industry’s first group rate program

1993: MGM Grand Hotel and Casino opens in Las Vegas

1994: Pegasus’ TravelWeb is launched as the first Web site for real-time hotel reservations

1994: Promus and Hyatt Hotels are the first chains to establish Internet sites

1994: Kerzner opens Atlantis on Paradise Island, Bahamas

1995: Ian Schrager opens the Delano on Miami Beach, followed by the Mondrian in Los Angeles one year later, giving rise to hotel bars as social hot spots

1995: First Internet reservations (Choice, Holiday Inn introduce online booking)

1995: Starwood/Goldman Sachs acquire Westin

1995: Marriott acquires 49% interest in Ritz Carlton Hotel Co.

1996: ITT agrees to be bought by Starwood Hotels Corp. for US$13.3 billion

1996: Hilton acquires Bally Entertainment Corp.

1997: Marriott acquires Renaissance Hotel Group for approximately US$1 billion

1997: Carlson acquires the Regent International Hotels from Four Seasons

1997-1998: Asian hotel crisis—Asia’s hotels are hit hard by the economic downturn as businessmen travel less frequently and do shorter stays, looking to cut costs

1998: Hilton spins off gaming operations into Caesar’s Entertainment

1998: The beginning of three years of record profits for the hotel industry

1999: Hilton Hotels Corp. acquires Promus Hotel Corp., owner of Embassy Suites, Doubletree, Hampton& Homewood Suites, for US$3.7 billion

1999: Starwood Hotels & Resorts debuts its W brand, taking the boutique segment mainstream

1999: Westin Heavenly Bed introduced

1999: The Venetian opens in Las Vegas, giving that city nine of the top 10 largest hotels in the world