Besides the weak economy, the "AIG effect" has had a major impact on luxury hotels' occupancies, says Vivian Deuschl, vice president of The Ritz-Carlton.
Companies are concerned about being seen as spending too much after insurance industry giant American International Group (AIG) was blasted by Congress last fall for spending $440,000 on an executive retreat at a California resort after being bailed out with taxpayer money.
Most of Ritz-Carlton's 72 hotels "have adjusted staffing levels downward, reduced hours and closed some dining outlets," Deuschl says.
"We have not compromised service levels but definitely have taken a hard look at operations and staffing and are trying to salvage jobs wherever possible."
Deuschl says Ritz-Carlton hotels offer discount packages but aren't having a "fire sale" on rates. Some Ritz-Carltons have lowered room rates, however.
At the chain's hotel in Philadelphia, for example, rates have dropped 10% to 15%, says Michael Walsh, the hotel's general manager. On Feb. 5, the hotel's website was charging $199 to $364 a night for a stay in mid-February.
Hotels with less-expensive room rates also are adjusting to the downturn.
Best Western spokeswoman Marie Yarroll says the chain, which has about 2,100 independently owned U.S. hotels, imposed a hiring freeze and other measures last year to "free up additional dollars for marketing."
Marriott has not filled some vacant jobs, and most of its more than 2,600 U.S. hotels have "instituted contingency plans with very tight cost controls," according to a company filing in October with the Securities and Exchange Commission. Marriott hotels also have reduced restaurant hours and made menu changes, company spokesman John Wolf says.
Guests notice cutbacks
Hotels cannot hide all the cutbacks. Some frequent travelers say they're starting to notice little things.
Some amenities — such as a bottle of water in the room or a newspaper delivered to the door — are gone. The quality of complimentary food and beverages has diminished in some club rooms or lobbies, or at hotel managers' guest receptions, they say.
Because many hotels have cut their staffs, frequent travelers say they're waiting longer to check in and out, have rooms made up and have cars retrieved by valets.
"There are fewer people to provide basic services, answer questions and make suggestions for restaurants and activities," says Howard Knoff, an education consultant in Little Rock.
Mike Maloney of Overland Park, Kan., says he and more than 10 other guests at a hotel near the Atlanta airport waited 30 minutes recently for the hotel's shuttle van, which was supposed to run every 10 minutes.
When the van didn't arrive, "I tried to get someone in a supervisory capacity to talk to at the front desk, but no one was manning it," says Maloney, who works in the beverage industry. He and the others had to pay for taxis to get to the airport.
Joe McInerney, president of the American Hotel & Lodging Association, says there may be "isolated cases" of service problems, but service hasn't declined at most hotels.
"The last thing a hotel wants is to have a guest leave and not come back," he says.
Some frequent travelers say some hotels have begun to nickel-and-dime them with charges for services that had been free.
Dawn Boehmer, a product specialist from Colorado Springs, says some hotels have started charging for Internet access and are charging excessively for faxes.