Too Many Rooms at the Inn

"The hotel industry today is at a point of crisis." This was the blunt message that Roger P. Sonnabend, thoughtful, 37-year-old executive vice president of Hotel Corp. of America, recently delivered to a convention hall full of his competitors. Scarcely anyone in his audience was prepared to disagree--or to deny that the U.S. hotel industry has been heedlessly drifting toward the crisis point for more than a decade.

"Right after the war and up until the mid '50s, there was always a tremendous demand for hotel space," explains Bert Sommers, general manager of Chicago's forty-year-old Sherman House. "Hotel managers got away with murder. They didn't put their dough back into their hotels; service and facilities went to hell." As the traveling public developed a preference for the convenience and modernity of motels, hotel occupancy rates shriveled from a nationwide average of 93% in 1946 to 62% last year. As operating costs rise for hotels, more and more are filling out their ledgers in red ink.

Building Too Fast. First to be hurt--because they were the first to be ringed in by motels--were hotels in smaller cities. But now gilded, multistoried motor hotels audaciously push into the heart of big cities. And established big-city hotels find themselves further threatened by the fancy new hotels being put up by chain hotel operators, such as the Hilton hotels now going up in San Francisco and Manhattan. "Overbuilding is our biggest problem," moans Manager Philip Weber of Los Angeles' sprawling old Ambassador. "We're building new facilities more rapidly than either travel or the population is increasing." Often builders of the new hotels agree that there are indeed too many rooms, but argue that it is the old and the inadequate that will suffer, not they. They count on air conditioning, room refrigerators, coffeemakers and other new amenities to draw crowds, and hope that cramped space, hasty building and other economies won't be held against them.

The speed of jets permits businessmen to fly into a city in the morning and home again at night; this has cut the average stay in the nation's convention hotels from 4 days to 2 1/2. And most hotelmen are convinced that Federal Tax Chief Mortimer Caplin's crackdown on expense accounts will cut the average hotel bill still more. "If the IRS rules remain as stringent as they are now, it'll murder us roomwise," worries Manager Ed Crowley of Los Angeles' Sheraton-West. "Guests who usually bring their wives or stay an extra day or two themselves just aren't doing it anymore."

Price Wars. Sonnabend is worried about the developing price war among hotelmen who have started offering special family rates, tourist class rooms, and discounts on rooms to big corporate users and conventions. Says Sonnabend: "We seem to have forgotten the expensive lesson of the Great Depression, when we discovered that the total market for hotel rooms is rather inflexible and that cutting prices really did not help."

Sonnabend's own solution to what plagues his industry is to concentrate on building motor hotels--Hotel Corp. now has 17 Charter-House motels v. g hotels --and luxury establishments catering to the big-spending jet set. He is also getting into overseas hotels, where there is still a room shortage. Other chains with money to spend, such as Sheraton and Hilton, are doing much the same thing. Older hotels are seeking to hold their own by modernizing their rooms and trying to improve service. San Francisco's Mark Hopkins now times each room service order, boasts that it can deliver a complete dinner in from 14 to 22 minutes. Sighs Chauncey Depew Steele, owner of the 33-year-old Hotel Continental in Cambridge, Mass.: "It's going to be a survival of the fittest. A lot of old hotels are going to end up as old ladies' and old men's homes."

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