Full Recovery May Take Some Time

NEW YORK— Experts are not forecasting another boom for the U.S. economy for quite some time, according to a presentation comprised of “Economists Predictions” given at the NYU Investment conference on Monday. The audience clearly found the topic to be of interest. In past years, this particular event tends to thin out a bit as its held immediately after the Monday luncheon. In this year of uncertainty, however, attendees hung in there, groaning occasionally as they listened with rapt attention at the forecasts laid before them. “Were not out of the woods yet, and wont be for some time,” David Wyss, chief economist for Standard & Poors, said of the economy in general. Wyss noted that the recovery that is before us is a fragile one, and could be derailed by any number of setbacks. Meanwhile, Mary Farrell, managing director of UBS Warburg, said that the chance of going back to the bull market of the nineties is nil. As for getting out of this particular recession, “Were expecting only a modest recovery, not a blockbuster one,” she said. Farrell pointed to the current demographic trends that are impacting the hotel industry. Baby boomers account for 30% of the general population in the United States, but get credit for 40% of all travel expenditures. This group, over the next 10 years will enjoy a period of peak spending patterns, has indicates its number-one expenditure is on travel, said Farrell. Gen Xers, meanwhile, have not yet hit peak spending years, but tend to take more expensive trips than Baby Boomers, and show a penchant for all-inclusives. And while Gen Xers show less loyalty to hotel brands, they do show a preference for paying for more superior rooms, said Farrell. On the topic of Internet connectivity, Farrell noted that as of November 2001, 55% of U.S. households had access to the Internet at home, compared with 41% in December 1999. Bjorn Hanson, global industry partner of hospitality & leisure for Pricewaterhouse, who moderated the presentation, updated the audience on his firms most recent forecast, which actually lowers predictions of the industrys fortunes for the year, thanks to an economy that is not recovering as quickly as anticipated, and to recently renewed fears of terrorist attacks here in the United States. “If occupancy is 59.8% in 2002 as anticipated, that would mean occupancy will have been lower in only seven of the last 75 years,” said Hanson There is good news behind the numbers, however, he said, noting that industry profits should reach $17.2 billion in 2002, up from $16.7 billion last year. The improvement comes in part from cost-cutting measures implemented by the hotel industry. Room starts this year, meanwhile, are forecast to hit the 44,300 mark, thats down from an average 95,000 room-starts enjoyed by the industry. That news may bode well for lodging, as such a dip in development tends to be followed by robust RevPAR growth in following years, said Hanson.