The Hotel Industry and Recessions

The hotel industry is a very interesting industry to examine. On the one hand, hotels have to contend with huge fixed costs. The management often has to worry about staff wages, enormous utilities bills, rooms and facilities maintenance, and other expenses. Obviously, it is not easy to run a hotel well. So have you ever wondered how hotels managed to survive when there is a recession? A recession makes it even harder for hotels to survive, not to mention being profitable. Consumer confidence is affected, and tourists tend to be more cautious with their spending. If bookings for hotel rooms suffer, the profit and loss statements are not going to look good either. Once the number of bookings for rooms decline, it affects all other areas of the hotels. The revenues for bars, restaurants, and other facilities all decline as well. Therefore, in times of recession, hotels must come up with innovative ways to not only survive but to thrive. You see, people who travel need hotels for many different reasons. Some travel for leisure, while others travel for business purposes. For those who travel just to relax, they can opt to cut back on spending during a recession. However, they still need entertainment – i.e. time away from their work. So those who are in the habit of taking vacations will still travel. The only difference is, perhaps they spend less. As for those who travel for business, traveling is a need. It’s part of the livelihood of the traveler. So even when there is a recession, there will still be people traveling for business meetings, business conventions, and so on. In other words, there is still a demand for hotel rooms. But again, in a recession, travelers are more likely to opt for more affordable accommodation. So hotels who understand this can come up with a variety of measures to remain competitive, and woo more travelers to the hotels. For example, some hotels choose to cut costs, by offering no frills bedding. You can’t expect lots of fanciful bells and whistles to go with the accommodation. But you can expect clean sheets and comfortable bedding. These are the essential items that meet basic needs. Others have chosen to run aggressive promotions on top of cost cutting measures. The goal is to get the word out, letting travelers know that in the current economic climate, they can save when they stay with affordable hotels. The challenge for such hotels, is to keep the quality of service, while offering accommodation at competitive rates. Only the best who know what they are doing can survive with this strategy. As a consumer, this means good news. You can still travel for leisure or for business and expect to find hotels with clean bedding, wireless internet access, and other basic facilities. Maybe when times are better, you can choose to stay in more luxurious hotels.

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This entry was posted on January 21, 2010 at January 21, 2010 and is filed under Hotel News. You can follow any responses to this entry through the RSS 2.0 feed.