Lodging landscape: business and rivalry brisk
If you're looking for the quintessential big-city hotel, it would be hard to find one more quintessential than the Palmer House. When I arrived there, a uniformed doorman stepped up to open the door and give me his arm as I alighted from my carriage.Skip to next paragraph
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Well, the carriage was a green and yellow Checker cab, and I was too burdened with my traveling reporter's paraphernalia of notebooks, city map, etc., to take full advantage of the doorman's proffered arm.
But you get the picture. Red velvet and crystal chandeliers and ceiling paintings and wood paneling and mirrors, and in one of the ballrooms, real gold leaf on the moldings. Columnist George Will once called its lobby ''the essence of lobbiness.''
If you ever get paged at the Palmer House, fear not that your name will be bellowed forth in unseemly fashion. Instead, a bellman will parade around the lobby bearing your name discreetly on a artist's pad; he will invite attention to the pad by means of a tintinnabulary triangle.
The hotel opened Sept. 26, 1871, and was closed just 13 days later by the Great Chicago Fire. It was rebuilt and reopened in 1873, then completely rebuilt , in phases, in the 1920s. In 1945, it was acquired by the Hilton chain, and today it is in the final phases of a $50 million renovation.
The tastefully low-key hum of activity of the Palmer House is typical of the prosperity at the upper end of the hotel industry.
The basic health of the industry as a whole has been ''fairly strong since last October, and getting stronger,'' says Michael Mueller, a hotel industry analyst at Montgomery Securities in San Francisco. Supply is growing with demand , he adds, about 2 to 3 percent annually.
''There's been a rapid expansion at both extremes,'' the upper and lower ends of the market, says Randy Smith, director of research at Laventhol & Horwath, a Philadelphia accounting and consulting firm.
It's the mid-price chains that are getting squeezed, hurt by lack of a clear market image. Ironically, the same chains that are so often condemned for their depressing sameness seem simultaneously to have problems with consistency.
Also, a number of the names that grace quite prestigious hotels in big cities also adorn some quite modest lodgings along the nation's highways and in smaller towns. When is a Sheraton not a Sheraton, or a Hilton not a Hilton?
It's not only differences of scale but of management. Some are corporate-owned and managed; others are investor-owned and corporate-managed; and some are franchise operations. Franchisees can be mom-and-pop teams or major companies in their own right, and their hotels may be better run than those under corporate management - or worse.
Given the high costs of building sites, construction, staffing, and overhead like restaurants, a developer wanting a put up a full-service downtown hotel may as well go for the brass ring and get into the luxury market. This has been especially true since the surge in interest rates began in 1979.
But by seeking out low-cost roadside sites and cutting back on dining rooms and other public spaces, a developer can put up a budget inn with rooms under $ 30 a night and still have what one analyst calls ''terrific margins'' because of low operating costs.