Letter: The recession is hitting the Ritz

Letter

Posted by on Mon, February 9, 2009

In the article, in the business section of today’s New York Times, HMB has been hit once again.

http://www.nytimes.com/2009/02/09/business/09junket.html?_r=1&ref=business

Vivian A. Deuschi, a spokeswoman for Ritz Carlton, a luxury hotel chain, said these cutbacks "have had a terrible effect on hotels, and luxury hotels have been very vulnerable."...The Ritz Carlton, in Half moon Bay, Calif., has received cancellations from 32 groups in the last four months, a loss of $2.3 million in revenue, she said.


Comment 1
Mon, February 9, 2009 4:06pm
Barry Parr
All my comments

That must be something like $200,000 in lost revenue to the city, depending on when the new Transient Occupancy Tax kicks in, and how much of the $2.3 million is for rooms vs other services.

Half Moon Bay budgeted [$4.2 million in Transient Occupancy Tax, and $2.2 million in sales tax revenue for 2008-09][1].

Applying this shortfall to other hotels and extrapolating it out to the end of 2009 leads to some scary numbers.

  [1]: http://www.half-moon-bay.ca.us/Budget_in_Brief_2008-09.pdf

I have heard from some reliable sources that the occupancy rate during the middle of the week at the Ritz is often below 10 percent.

The City of HMB is going to have a giant hole in it’s budget for years to come.

The Old Guard City Council members are seeking to give Keenan $18 million in cash by attaching a huge ball-and-chain of municipal debt to the citizens of HMB.

That way, Keenan gets his money up front, even if the City later goes bankrupt when its biggest source of revenue (the Ritz) dries up and expenses continue to spiral upward as they have been.

This is the most likely scenario in my opinion because the debt service on the municipal bonds used to pay off Keenan will be quite onerous and will eventually push the City’s budget beyond the breaking point when combined with the Old Guard’s lack of fiscal discipline on salaries and benefits.

If the Old Guard City Council had any sense or integrity, they would declare bankruptcy BEFORE paying Keenan the $18 million in order to protect the citizens interests to the maximum extent possible. They won’t do that, of course, or even discuss it, because they have been under Keenan’s thumb from day one.

So we will end up in the worst case scenario where the City is forced to declare bankruptcy a year or two after it hands over $18 million in cash to Keenan, who will be laughing all the way to the bank.

Comment 3
Tue, February 10, 2009 6:22pm
Jo Laster
All my comments

I took my daily walk around the Ritz on Monday morning.  There was only one golfer.  I met two people on the trail.  Nobody outside, the whole place had an air of emptiness.  I also noticed that the parking lot on the SE corner of Highway 1 where the Ritz employees used to park was empty.

Comment 4
Tue, February 10, 2009 6:24pm
Jo Laster
All my comments

PS.  I hope John Lynch found his hearing aids.  Please keep us informed.