Crests and troughs have been an endemic feature of the economic cycle; at least since the beginning of economic cycles not so long ago. The optimism that drives new peaks stems from seemingly inexplicable ways and no amount of trolling for signals in reams of data affords a high probability prediction that could be relied on. So it seems at the current stage of this extended business cycle that, despite what seems like a slew of negative news from the worst dip in the stock market in three years – only to be reversed in a day – to new woes among sub-prime lenders, there remains an as yet unbridled optimism that this business cycle has much farther to go.
One aspect to the good economic news that is, perhaps, not adequately considered is the effect of policy – good and bad – on outcomes for the economy. It is not accidental that a lowering of room taxes realizes gains for hotels. Nor is it serendipitous when crusty bureaucrats at the Department of State are finally prodded into action in announcing new additions to visa-waiver countries – and that results in a tourism bonanza. That was exactly happened to Canada when they enabled visa free travel for South Korean visitors. Every one in the hospitality industry ought to rejoice at the news (link may require subscription) that Foggy Bottom has added a bunch of new countries to the existing list of countries that constitute the Visa-Waiver Program. The new nations, whose citizens do not have to face a grilling in front of a grim faced visa officer and submit reams of paperwork before landing on US shores, include Argentina, Brazil, Cyprus, the Czech Republic, Estonia, Greece, Israel, Malta, Slovakia, South Korea, Taiwan and Uruguay. The benefits to the hotel industry – New York in particular – cannot be overemphasized.
It may be too much to hope for other policy initiatives that could spur grouwth in the second biggest field of employment in the US. These include revamping or even tossing out Sarbanes-Oxley (SOX) that is widely believed to have hampered US entrepreneurial growth – its implication for the hospitality industry is the loss of a lot of corporate business that just dissipated owing to the frustrations and costs of compliance; an easing of HI-B visa quotas to enable US firms to hire overseas talent – an existential issue for many in the hotel industry and (it would be a miracle!) remove the absurdly archaic rules against foreign control of airlines.