NEW YORK— The sky isn’t falling on the lodging industry in the current economy, according to leading industry executives. That was the basic assessment from an informal question-and-answer session among the leading industry execs and the media during the 23rd Annual New York University International Hospitality Industry Investment Conference recently held at the Marriott Marquis here. Moderated by conference chairman Jonathan Tisch, chairman/CEO Loews Hotels, the panel included: Chip Conley, chairman/CEO, Joie de Vivre Hospitality; Georges Le Mener, president/CEO, Accor Lodging North America; Randell Smith, CEO, Smith Travel Research; Bjorn Hanson, global industry partner, hospitality and leisure, PricewaterhouseCoopers (PwC); and Laila Rach, associate dean, Preston Robert Tisch Center for Hospitality, Tourism and Travel Administration, New York University. Although a slowing economy has put a crimp in national business, thus decreasing corporate travel, Smith didn’t think the industry would see a lot of discounting to drive revenue, except “on occasion.” “The only area of risk is in the group market,” said Hanson, indicating it would be difficult not to negotiate price “if someone comes in with a 500-room-night piece of business.” Layering In Fees Hotels are also making up for any weakness in rate negotiations, said Hanson, by layering in other fees, whether for early departure, cancellation, phone/Internet access, housekeeping or the fee of the moment, energy usage. “Energy surcharges have become a profit center for hotels,” contended Hanson. Panelists agreed hitting the consumer with the fees, particularly after the fact at checkout, was a “terrible trend.” As the industry heads into the summer, Smith expected occupancy numbers to “creep back up a little bit. Not positive, but not so negative. We’re still of the opinion that most of the difficulty is related to the business side, and we’re fairly optimistic the leisure side is still going to hold fairly firm. The bottom line is, people like to travel. People will take their trips pretty much regardless [of the economic climate].” He expected the business travel market to be weak in areas like San Francisco, New York, Chicago and other major markets, but added that, “I think a lot of roadside hotels are going to do quite well this summer.” Conley, whose boutique hotels are concentrated in Northern California, noted that “weakness is a relative word” when it comes to market health, stressing that San Francisco and New York still enjoy occupancies in the low 80s, and are actually the highest rates in the country, according to Smith. “We’re certainly experiencing a stabilization in leisure travel, especially in our Florida hotels,” said Tisch, noting numbers remain strong there, but added, “Who knows what’s going to happen after Labor Day? “People are working harder than ever, and there is a sense of entitlement to vacation, especially when it includes their family,” he continued, concurring with the panel that there’s a “blurring” happening between business and leisure travel. “When you ask if the summer leisure travel will decline or if people will shorten their trips by a few days, what it really means for the hotel industry is the expectation of the traveler is going to be greater,” said Rach. “That’s because money is a little more precious, and [travelers]are going to ask if they are getting the return on their money that they expect.” To keep the current economic adjustment in perspective for the industry, Hanson said it was important to recall downturns have been led by consumer demand versus business demand. “When consumer demand drops off first, it stays down. Consumers lose confidence, they worry about jobs, you have a prolonged downturn in lodging demand.” In contrast, he said, “Business is just, frankly lousy at enforcing travel policy, so typically you see a three-month effect. Businesses may say they’re cutting back, but they’re good at doin
