With occupancy rates down and little credit available, many hotels are feeling the pinch right now. The New York Times published an article in today's paper about how many hotels are facing an uncertain future. And it's being felt across all markets, particularly in the luxury market.
From the Times: “Luxury is just getting killed,” said Bobby Bowers, senior vice president for operations at STR Global, a company that monitors and researches hotel performance. While occupancy and therefore room rates are down at every level of hotel, the drop is more pronounced at the higher end.
"Since these hotels have greater fixed operating costs because of their extra services and larger staffs, they need higher occupancy rates just to break even. This is compounded by what many analysts have called the “A.I.G. effect,” as companies worry about public or regulatory scrutiny if their employees stay at lavish properties or hold events there."
Of course the effects of the current economic downturn vary from market to market, but let's just hope this isn't a sign that conditions are continuing to deteriorate.
--Joel Schettler
Editor
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