May
29
2010
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Author:This is particularly true for the hotel industry, as seen in declining profits and demand owing to severe cost-cutting from businesses and individuals alike.
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Perhaps the most glaring evidence of the recession is how room rates for hotels across the entire world are at the lowest figure in 5 years. This is largely due to being down by a whopping 17 percent. Room rates are down that much in the period from the start of the second half of 2008 to the end of the first half of 2009.
The 17-percent drop across the board is a direct result of price drops initiated by various hotel managements in order to drive up bookings and maintain a semblance of profitability. That means it is a conscious attempt to lower prices.
For a stunning contrast, one need only look at hotel rates back in 2004, the year of the introduction of the Hotel Price Index by one of the leading hotel index sites on the Internet. June 2009 figures are only up 1 percent from the figures in 2004.
It was found that hotel rates in the Americas were most affected by the recession, as prices dropped comparatively higher than their European counterparts. Asian hotels were pretty much within the mean.
Drumming up patronage is perhaps even more important for hotels than to stay with their prices. This helps generate financial fluidity and allows hotels to get the most rooms utilized. This is even more apparent when the demand fell in the midst of the economic decline, as companies and even leisure travelers sought to cut their travel expenses-mostly by looking for accommodation that served as cheaper alternatives to hotels.
The conscious attempts to drive prices down were met with an eventual increase in demand, allowing most hotels to have an increase in capacity. While this allowed hotels to stave off the recession’s ill effects, there are indications that this was not quite beneficial when it comes to the long-term aspect of the move. Still, it was a necessary business decision for most hotels.
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Experts say that the lowered prices are quite likely to be here for some time, as hoteliers across the world look for a more consistent and more stable economic landscape. It is safe to say that most businesses are on the long road to recovery, and this is more so for the robust hotel industry.
Third quarter 2009 figures support this notion, as profits and admissions are up compared to the same period last year. It is only a matter of time before things start picking up again-and hopefully, for travelers, prices stay or are at least comparable to where they currently are.
All in all, it is safe to say that even with the threat posed by the global recession over the past year or so, it was able to bring some much-needed changes as well as some good surprises for the hotel industry.
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