Hotel Group Seeks Upturn in Uncertain Times

MILWAUKEE, WI-Although the report is for the quarter that ended Aug. 30, hotel and theater owner Marcus Corp. says revenues were up 7.6% in the previous three months while net earnings jumped 28.6% during the same time. Movies led the way, as theater net revenues were up 39% in the company’s first quarter.

However, the company was cautious about its hotel operations even before the terrorist attacks of Sept. 11, with cost-cutting measures such as reducing housekeeping payrolls, put in place. While operating income rose for Marcus Hotels and Resorts in the quarter, they decreased for its mid-priced Baymont Inns & Suites, which caters heavily to business travelers.

“Business and leisure travel has decreased dramatically and all of our full-service properties have experienced cancellations of group events,” says Chairman and CEO Stephen H. Marcus. “And even though Baymont is less reliant on group events, business travelers are the division’s No. 1 market and as a result, the division’s performance will also be affected. On the other hand, we are seeing a few signs that travelers are beginning to get back on the road and we are encouraged that many group events are being rescheduled for future dates.”

The hotel and motel business was in the doldrums before Sept. 11, Marcus notes. “August was a particularly tough month for the lodging industry, and we were no exception,” he says. “The shock waves…occurred in an already difficult period.”

In the days following the attacks on the World Trade Center and Pentagon, Baymont revenues were down 20%. While results have picked up, they still are double-digit negative, Marcus reports.

“The trend, however, is positive,” Marcus says. “Clearly occupancy will be down in the coming weeks. The question is, how long?”

On the other hand, Marcus says the theater operations may buoy company operations in coming months.

“It seems hard to believe that a year ago at this time, the questions were all about the difficulties in the theater industry,” Marcus says. “Historically, movie theaters have always performed well in tough economic times.”