The economy and the hotel industry

[Jason's Storm]

Do you think the economic downturn will mean better hotel rates and better priceline and Hotwire rates? We all remember when 9/11 happened, the hotel industry took a hit and Priceline and Hotwire really took off.

~JS

[powerplantop]

From what I see business travel is strong. The hotel that I am at is running from 90 to 100% full. They have been that way all year. Airplanes are flying close to full and ticket prices are up.

[Will]

Air travel keeps getting more expensive, Air Canada just put a new $60 (or less depending on distance) fuel charge on domestic/international flights. So as more carriers increase airfares, fewer people will want to travel meaning less demand for hotels. Also as business is hit by the recession, business travel budgets are bound to tighten up. The full effects of this could be 6months or a year off depending on the economy and oil prices however.

[slruud]

What recession???? The flights I'm on are usually full, and high end hotels are booked at full asking price. The Disney resorts are full, and people can still afford the deluxe resorts. We're traveling cheaper now than we did ten years ago, though I don't expect many people to believe that, With Priceline and Hotwire, my hotel cost of living has gone down considerably. I'm booked for travel through October, and will deal with November and December after Southwest releases their schedule.

[Jason's Storm]

Your saving on American will go down with their $15 "service charge" for the FIRST checked bag. Jay Leno, as many call it ransom. What's next, charge for window seats, a quarter to use the bathroom? Oh the horror, oh crap, I might have given them ideas. :)

~JS

[powerplantop]

Your saving on American will go down with their $15 "service charge" for the FIRST checked bag. Jay Leno, as many call it ransom. What's next, charge for window seats, a quarter to use the bathroom? Oh the horror, oh crap, I might have given them ideas. :)

~JS

Some airlines already charge extra for the best seats.

[Peter Pan]

Every Star Alliance flight I've been on in the past 5-6 months has been full or near full. Some have been even overbooked so I'm not really sure what the heck the airlines are complaining about. They even slap big fuel surcharges on published fares to make up the difference for the higher fuel and some change too.

Also hotels that I go to (almost always chain 3-4 stars) seem to be frequently operating near capacity or occasionally even sold out with big events and/or other acitivites going on. Of course I can see a decreased traffic at some specific areas but most places are doing very strong or so it appears.

[BEAV]

At the moment, I don't think the current ecomonic downturn is necessarily hitting all parts of the country with regard to travel & tourism. I think larger cities, such as NYC, DC, San Francisco, Chicago, etc are benefitting from the weak dollar when it comes to foreign travelers visiting. At the very least, heavy foreign travel into the US is helping to curb some of the downturns caused by our own economic woes.

But when it comes to smaller towns and areas, I think they will see some fallout from the US economy. An article in the USAToday last week quoted a small motel owner in Seaside, Oregon as saying they were not booked up for the Memorial Day weekend (like they usually are) and that bookings for the month of June were few & far between.

[BEAV]

A few thoughts and comments since my last post on this subject:

This thread is now nearly two months old. A lot has happened since then with regard to the price of oil and gas at the pump. IMO the psychological impact of $4 a gallon gas is pretty substantial. People in my office, who can easily afford $4 a gallon gas, can do nothing but talk about how they are making cutbacks in their spending, leisure driving, etc, in an effort to counterbalance higher fuel costs. A local newspaper article quoted a restaurant owner who said business was still good, however went on to say that the European tourists were ordering high end wines like crazy, and while Americans were still coming, they were scrutinizing their selections, looking to cut a few bucks here and there.

With regard to full airplanes, keep in mind airlines are cutting back their frequency of flights as well as operating smaller jets. While you flew in a 100-seat 737 last year, your next flight between the same two city pairs might very well be in a 70-seat regional jet.

Yesterday, for the first time in years, I noticed a very high end resort, the Bernardus Lodge in Carmel Valley, CA, pop up on Hotwire. I have long wanted to stay at this property, but didn't want to pay $400+ per night to do so. Now you can pick up a room here on Hotwire for $242. Coincidence or sign of the times? You decide!

[Colfax]

Several weeks ago I stayed at a 2.5* hotel, part of a national chain that participates in Priceline a lot.

The clerk couldn't immediately locate my reservation and had to step into the back room for a minute. Snoop that I am while I waited I looked over the counter and saw the hotel's prior week's occupancy report on the counter. The report showed daily occupancy levels and average room rates, day by day.

Over seven days the hotel's highest occupancy rate was 55%. Five days had occupancy in the 40's, and one day was in the 30's.

But despite the hotel's low occupancy they recently RAISED their Priceline rate.

The hotel's energy costs have shot up like everyone elses. I'd guess their higher Priceline rate is an attempt to recoup some of those energy costs, and they need to do that despite their low occupancy. I expect we'll be seeing energy surcharges at hotels again soon, like there were during the last energy crisis.

The energy situation cuts both ways when it comes to Priceline. Declining occupancy rates will probably bring new hotels to Priceline, hotels that never participated before, as in BEAV's example. But other hotels will raise their Priceline rates, as one approach among many to recovering some of their own increasing fixed costs.

[kstrom]

Over winter break, we'd love to take our first real vacation (i.e., not one linked to work or visiting relatives), but with the high price of airline tickets I'm going to have to find some real hotel bargains. Since the trip is optional, I can wait a little bit if it increases the chance of getting a better bargain.

With the economy sinking to new lows in the last couple of months and all of the press coverage about people traveling less, it seems like travel prices have got to come down. Has anyone seen any sign of lower bids being accepted in the last month or so? -Kstrom

[Shea77]

I work for a Fortune 100 company with over 100,000 employees and we were just told that our travel budgets for 2009 will be slashed by 30-50%, depending on the department. I think that other companies may also have smaller 09 budgets and maybe that will trickle down and mean bigger savings for Priceline customers.