Receding recession?

The NBER (National Bureau of Economic Research), the "official" arbiter of economic conditions stated that the longest post-war recession ended in June of last year. Almost on cue, there have been a slew of reports pointing to the industry's alleged revival.

The Wall Street Journal reported earlier that "the travel industry seems to be snapping back faster than the rest of the
economy, with business travel fueling much of the increase. Spending on
airplane seats, hotel rooms and rental cars jumped in the second
quarter. Employment in the sector, such as hotel maids and travel
agents, rose 2.2% in the same period." 

ABC News has a headline that warns Thanksgiving travelers of a 10% increase in airfares while anecdotes from regional papers such as the Albany Herald in Georgia point to local travel and hotel numbers being up by double digits for August of this year as compared to the same month last year.

The Montreal Gazette notes that "Canadian corporate travel has increased about 16% year-over-year in the
first eight months of the year, about a percentage point higher than
the global average" while farther out airlines in the Asia-Pacific region airlines are ratcheting up prices "as travelers return in their (sic) droves after holding back on their travel plans last year because of the global recession."

The nascent recovery has in turn brought about an uptick in hotel asset sales as this recent report in the LA Times notes with the headline " L.A. hotels attracting more guests, investors. After a devastating recession, occupancy for properties in L.A. County is up and buyers are stepping forward."

But many hotel owners and operators likely will attest to the industry's revival only when pricing power as manifested in the ability to upsell as opposed to upgrade facilities and amenities. Far too many suites are still given away to gain and retain customers as is the case with freebies such as breakfast, parking and airport transfer besides "amenities" like mini-bar privileges (as in this London hotel) or free laptops and mobile phones offer last year in another London hotel. And that is beyond what is purloined by some hotel guests.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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