MeriStar Names Morse As Prez Of Operations

Robert Morse this month assumed his new duties as president of operations for MeriStar Hotels & Resorts. The appointment comes not only at a critical moment for business travel as a result of the slowing economy and last month's terrorist attacks, but at a turning point for MeriStar, whose parent company, MeriStar Hospitality Corp., last month abandoned plans to merge with FelCor Lodging Trust.

"These certainly are difficult times for business travel, but we see the markets slowly improving at what is usually the busiest season of the year," said Morse, who previously was president of Millennium Hotels & Resorts, the U.S. division of U.K.-based Millennium & Copthorne Hotels Plc. "Most seriously affected have been the large downtown hotels. Many bookings made in September and subsequently canceled, however, are now being rebooked for later in the year or for the first quarter of 2002."

The impact on the group business particularly had been severe. "Many meetings were canceled as a result of last month's events, but even among those that went forward, many saw relatively light pickup," he said.

MeriStar's portfolio consists of 276 hotels. A large number of Hilton Hotels Corp., Starwood Hotels & Resorts Worldwide and Marriott International branded properties are included. At the end of 2001, for example, MeriStar managed 32 Hilton hotels, in addition to a number of Hampton, Doubletree and other Hilton hotel brands.

"In difficult economic times, independent hotels tend to have a harder time marketing themselves than hotels that fly the major flags," Morse said. "Because there's so much uncertainty, buyers gravitate not only to the best locations, but to the strongest names in the best locations."

Morse expects the hotel industry to undergo another wave of consolidation. "It was the same thing in the late '80s and early '90s. When the economy weakens, the number of these transactions inevitably tends to increase." Washington, D.C.-based MeriStar is well positioned for such a scenario. "We've already consolidated many of our back-office systems, such as purchasing, and are bulk-purchasing not only commodities but things like insurance. Consequently, we're able to function quite cost-effectively, compared to smaller management companies," he said.

With the proposed FelCor merger behind it, MeriStar can move forward aggressively. "It's an opportunity for us to build MeriStar," Morse said. "In terms of expansion, we've been in sleep mode in anticipation of the FelCor deal." In announcing that merger talks had been terminated, the two parties cited the effect of the events of Sept. 11 on the economy and financial markets. "With the merger now off the table—and the economy what it is—there are likely to be significant opportunities for us in the coming months," Morse said.