Fast vanishing premium guests

The Wall Street Journal reports on woes in the airline industry with an article headlined “Economy Takes Toll on Premium Airline Passengers. The financial crisis has hit, among others, British Airways which has a lot of exposure to the banking sector on its London-New York route and its flights to other finance centers, including Hong Kong and Tokyo. The airline has lost first- and business-class traffic by as much as 9% in September from a year earlier. That slowdown has impacted other travel areas such as Asia as well.

The same report notes that the ‘lodging business hasn’t escaped unscathed’ with some higher-end hotels making inventory available to segments like airline crews, government travelers that. That “cannibalizing” of business heretofore spurned, can only have a negative cascading effect on hotels that made do with that end of the customer continuum.

The New York Times also has a report with a stark headline that reads “Travel Industry Shaken By Economic Downturn”. The article notes that domestic hotel occupancy down 5 percent from the previous September and “the higher-price segment of the hotel industry, which had been holding its own, now also seems to be feeling the pain”. Adding to that economic pain has been the faster rate of cancellations of existing reservations which are now running about 50 percent above normal at full-service hotels according to Bjorn Hanson, of the Tisch Center for Hospitality, Tourism and Sports Management at New York University.

Other parts of the country do not seem to be faring much better. The Miami Herald has a report headlined “South Florida luxury hotels tested in hard times”. Apparently “the boom times are over for South Florida’s young roster of ultra-luxury hotels as a global slowdown could show whether the region has put too much stock in wealthy travelers”. The article quotes the sales director of the luxury hotel, the Setai who predicts that a sizable number of guests this winter will balk at the South Beach resort’s $1,100 standard daily rate, forcing him to extend a $620 weekday special into the weekend.

At another part of the country in Beaumont, TX in a distinctly different segment a very different (and heartening) story is playing out with the Beaumont Enterprise reporting that “Hotels full; grab a room at checkout if you can”. The reason Southeast Texas hotels are full has a simple explanation: Hurricane Ike. Many hotels and inns are still waiting to reopen because of damage from the Sept. 13 storm while others are filled with contractors and relief workers. The Beaumont Convention and Visitors Bureau. notes that there are”stories of people going from hotel to hotel trying to find a room. It’s a crapshoot with the demand for hotels so great that the bureau receives around 30 to 35 calls a day about hotel rooms, which is up from pre-Ike average of five calls a day”.

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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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