The Hotel Times - June 2008 - (Page 14) COVER STORY: DOWN BUT NOT OUT Continued from page 13 dining. ª My guess is that the 2.6 percent was more trend analysis than serious measures, though it also may have been related to available seat miles on planes,º he said. But since the number of days that each passenger remains away is unknown, such an analysis is imprecise, he pointed out. More Asian travel While noting that economic effects are certainly felt globally, recent studies show that the largest number of visitors to Asian countries are Asians, more of whom now are able to travel, pointed out Dr. Judy Siguaw, dean of the Cornell-Nanyang Institute of Hospitality Management in Singapore. Outbound travel from Asian countries has been increasing at a rate of approximately 20 percent per year in recent years, she said, adding that the World Tourism Organization reports that by 2020Ð spurred by rising gross domestic product and low-cost airline carriersÐ outbound travelers from China alone will number 100 million. Consequently, Siguaw said, the Asia-Pacific and Middle East markets likely will remain buoyant, although she expects they will feel some effects from a U.S. recession, nevertheless. Global economic growth, particularly in China and India, should continue to help mitigate softening market conditions The forecast of macroeconomic advisors is more favorable for the second half of the year. BJORN HANSON, PARTNER, PRICEWATERHOUSE COOPERS in the U.S., added Mark Woodworth, president of PKF Hospitality Research in Atlanta. While the global economy has clearly become more diverse and is less reliant on the economic well-being of the U.S., he noted, the international lodging industry could feel the reverberations in the unlikely event that the U.S. falls into a full-blown prolonged recession. Fractured credit markets, the high price of fuel and commodities in general, as well as an escalating rate of inflation, all combine to create a headwind that has begun to slow consumer behavior, he said. Should this persist, continued Woodworth, the business sector will weaken, heightening the angst many market participants feel about the near-term future of the industry. Because of the weakness of the American dollar, many foreign markets, starting with Europe, clearly aren' t seeing the same level of inbound travel from the U.S. as they historically have, he said. While Yesawich said he doesn' t anticipate wholesale international or domestic travel cancellations, he does expect some fallout from the downturn in the U.S. economyÐ probably in the low single digits. Additionally, he said a transformation of consumer buying habits, or ª trading down,º has begun: Travelers are shopping more aggressively for deals, including for lodging. Three factors are contributing to this trading down phenomenon, said Yesawich: pressure on household budgets, the inflated cost of gasoline and its impact on car travel, and the overall inflated cost of travel, which is driven primarily by fuel increases whether traveling by airplane or car. Generally speaking, however, he noted hotels are keeping a lid on prices. ª I think they' re mindful of the pressure and have Global economic growth, particularly in China and India, should continue to help mitigate softening market conditions in the U.S. MARK WOODWORTH, PRESIDENT, PKF HOSPITALITY RESEARCH been reticent to discount rates the way we' ve seen them do in the past.º He added that a number of promotional offers are bound to hit the market this summer. If a recession grows in intensity, so too will trading down, particularly when it comes to business, Ratajczak observed. At the same time, because they' re selling tools, he said it' s unclear how much a recession will affect the number of business conventions. Attendance at conventions could drop, which of course would take a bite out of hotel traffic, he added. But because people like to take trips, he doesn' t believe leisure travel will be affected to the same extent unless a recession becomes severe. At the end of the day, although the U.S. economy remains the world' s most dominant, with the establishment of the European Union and the growth of economics in Asia and the Middle East, its status has diminished somewhat, Ratajczak said. He also noted that while U.S. travelers to international destinations still are the most or among the most important sources of business, with leisure and group demand to more regions than any others, like the U.S. economy, it' s not as strong as it was. hmm@questex.com 14 The Hotel Times June 2008 www.TheHotelTimes.com http://www.TheHotelTimes.com
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.