The epidemic of flight cancellations and delays at Los Angeles International Airport this year has infuriated untold numbers of air travelers, but the owner/operators of nearby hotels couldn't be happier.
Airlines have been paying for the rooms of stranded guests, leading to an unprecedented business boom for hotels.
At the 591-room Wyndham Hotel, sales have been up an average of $100,000 a month due to the situation, said Steve Silbar, the Wyndham's director of sales and marketing.
"There have been days that I left the hotel at 6 p.m. with a projected occupancy of 50 percent," Silbar said. "I've come back the next morning to find that we sold the remaining 300 rooms and were 100-percent full. That's always a nice surprise."
For the last eight months, the hotel has sold an average of about 1,000 rooms per month to stranded passengers. That's a significant increase over the 500 to 600 rooms per month the hotel typically sells in this category.
"It was a fabulous summer," said Tong DiRaimondo, director of sales and marketing at the Radisson Los Angeles Westside in Culver City.
DiRaimondo thought August might be a disaster after the Democratic National Committee downgraded its reservation from 233 rooms to 48. However, he ended up with an occupancy rate of 103 percent.
The hotel aggressively sought business from the airlines. If a guest left the hotel at 9 p.m., the room would be immediately cleaned and resold within hours to stranded passengers. It allowed the hotel to "double-sell" rooms on many days of the month and to reach an occupancy rate of more than 100 percent.
"It's an absolute no-brainer. If you have an empty room , clean the room and sell it again," DiRaimondo said.
For the airlines, buying hotel rooms is an expected cost of doing business, said Jon Kutler, president of Quarterdeck Investment Partners, a merger and acquisitions firm that deals with the aerospace and defense industry.
"It most frequently happens when you are trying to fill every seat. It's usually offset by record earnings," Kutler said. "One of the reasons this is happening is because airlines are flying with an unprecedented level of utilization."
Hotel operators say much of the demand this summer was driven by United Airlines, which endured a highly publicized string of flight cancellations nationwide. Kutler said, in that scenario, hotel costs can get very steep, but most of the time the expense is more than offset by planes that are filled to capacity.
To be successful in the stranded-passenger arena, the Wyndham's Silbar said, hotels have to form strong bonds with the airlines.
"This is an airline's customer who is not happy," he said. "You get their problem customer. It becomes a reflection on the airline if you don't treat them great."
In the hotel business, the trick is to get the right mix of guests. Since rooms sold to airlines are discounted by 50 to 55 percent, a hotel cannot rely too heavily on sales to distressed passengers. The hotels also have to stay competitive with the rates they charge the airlines.
"They won't even talk to you if your price is higher than the other hotels," Silbar said.
Not all LAX-area hotels have traditionally sought the airlines' distressed passengers. But it's a natural for the Wyndham, one of the closest hotels to the airport.
Silbar expects other hotels will become more aggressive about catering to stranded passengers in the months ahead.
Some hotels will never get into the business because they don't want to sell their rooms at discounted rates.
"You're not going to find the Ritz-Carlton going after this business," said Tim Carlin, owner of LAX PAX, a company that helps airlines place stranded guests in local hotels.
While some hotels say their business has been up, Carlin said the number of distressed passengers being placed at hotels by LAX PAX is actually down about 30 percent. However, United Airlines is not among his 28 airline clients. (It handles its own distressed passenger placement.)
In a normal week, Carlin said, he needs more than 2,000 hotel rooms for distressed passengers. Typically, the problem is not canceled flights or mechanical problems.
"Most of the time it's misconnects," he said. "A plane is half an hour late coming in from Cleveland and it's too late for passengers to make their connections to their next flight. Then the airline has to put them up overnight."
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