Sars redux?

A travel slowdown akin to what occurred in the wake of “SARS” (Severe acute respiratory syndrome) is coursing through the industry’s veins. Only this time the pathogen is financial according to two independent reports mentioned in the Wall Street Journal blog “The Middle Seat Terminal“.
The Journal blog notes that IATA has put out a “strongly worded press release” comparing September travel numbers with the SARS care of 2003″. Headlined “Alarming Drop for September International Traffic”, IATA notes that the “deterioration in traffic is alarmingly fast-paced and widespread”. Another report by Deloitte references the British hotel industry which again used the SARS analogy while saying “September was the worst month since August 2003 when SARS scares reduced travel.”
The Journal blog has an interesting and (in the opinion of this blog) an accurate analysis of, perhaps, extraneous considerations in the alarmist language used. The WSJ notes that “Clearly it seems a consensus is growing about a slowdown in global travel — along with the worldwide economy. But even so, there are a couple things worth pointing out about IATA’s press release. For one, IATA is in the midst of making a pronounced push for governmental change on airline regulation, so airlines might have an interest in painting a dark picture of the industry as they urge politicians to act. But sinking traffic might also be due, in part, to higher fares from carriers, which could actually result in better financial prospects for airlines — even if planes are emptier”. That airline travel is getting pricier is unambiguously the case from this report amongst others.
Nevertheless, a steep decline in international travel combined with a strengthening of the dollar and widespread economic uncertainty almost certainly means a significant slowdown for the hotel industry.

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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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