HOTELMARKETING.COM

Dim days for luxury hotels

November 04, 2008 | Hospitality Industry

Even as midprice hotels began losing business this past summer, luxury hotels continued to fill their rooms. Companies treated the hotels as perks for top executives and quality locations for high-level business meetings. But times have changed.

Since mid-September, almost in parallel with the stock market turmoil, demand for fancy hotel rooms has plummeted. Patrick Ford, the president of Lodging Econometrics, said that luxury hotel room revenue rates “slowed in mid-September and really ratcheted downward during October.”

Revenue per available room, the standard measure of performance, dropped 14 percent at upscale and luxury hotels in the week ending Oct. 18 over the comparable week last year, according to Smith Travel Research. For hotels in general, the decline was about 8 percent.

Even in the best of economic times, most luxury hotels were not sustained by business from rich leisure travelers. Instead, those hotels depended on corporate travel, including meetings and conferences.

But with the economic downturn, companies have been cutting back on travel expenses. The hotels have also experienced a drop-off in business from affluent international leisure and business travelers, as economies around the globe slow and the value of the dollar rises.

Get the full story at The New York Times

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