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Hotel and Hospitality Industry

It could be squabbled that the industry which is most targeted by the global financial is the entertainment and hospitality industry.

This is because entertainment, tourism and leisure are very susceptible to economic indecisively and unpredictably. Most travel and tourism activities vary from place to place or person to person expenses, that how much a person can spend or how the place worth. During the time of economic recession, people like preserve money to wrap the indispensable of life such as food, shelter and family necessities.

This, though, does not signify that tourism and entertainment will be endangered specie. In almost all epochs of economic crisis or global tourism shock arising from events such as 9/11 attack on the World Trade Centre & Pentagon (United States), people did not stop traveling, but they had traveled differently from the way they were used to in moments of economic boom. Hotels and hospitality business which will survive in the months ahead, say observes of the industry, are those with aptitude to the new conditions.

Between short and medium term, there will emerge voyagers who will spend less on travel. Those hotels and hospitality business, which can acclimatize to service travelers on a fixed budget, will do well. The demand for the luxury end of the market is likely to reduce while demand for either low cost or professed goods value products and services is expected to grow. Airlines and hotels especially need to rapidly acclimatize to this trend.

Experts also envisaged that destinations with “favorable” exchange rates may advantage from the current credit clutch. Ironically, the course in value of the US dollar and the Euro may kindle Americans, Europeans and Japanese to recommence traveling overseas. The growth of Indian and Chinese outbound travel may sluggish but will continue because these economies are still mounting.

Worse Year For Hotel Industry:  PKF Hospitality Research published a study on 26 January, 2009, forecasting that hotel loan evasions, bankruptcies and foreclosures will rise in 2009, producing one of the worst years on record for the hotel industry.

The PKF study ventures that the average U.S. hotel in 2009 will undergo a 9.8% year-over-year drop in proceeds from the rental of guest rooms, or RevPAR, a key financial gauge for the industry. RevPAR dipped 1.8% in 2008.

“The drop in RevPAR for 2009 will be the fourth-largest annual down fall in this important gauge since 1930,” said R. Mark Woodworth, President of PKF-HR, in a news release. “Further, PKF-HR is forecasting that the nation’s hotels will not experience a year-over-year quarterly increase in RevPAR until the third quarter of 2010.”

The projected eight uninterrupted quarters of moribund RevPAR, commencement with the third quarter 2008 decline of 1.1%, would be the longest widen of falling proceeds tolerated by U.S. hotels since PKF-HR began pathway of falling revenues endured by U.S. hotels since PKF-HR began tracking the industry more than 20 years ago.

With revenue plummeting, the number of full-service United States hotels that don’t have the cash flow required to pay their debt will jump 25% in 2009, PKF-HR says. The prediction is based on a cram of the 6,000 hotel financial statements in PKF-HR’s database. Those credentials indicate that 15.9% of hotels were unable to make out sufficient cash from operations to cover their debt service payments in 2008. Based on current prediction, PKF-HR estimates that the number will increase 19.9% in 2009.

“More and more owners will have to reach into their own pockets to meet these expected debt service shortfalls.”

Accordingto Bob Eaton, Executive Managing Director of PKF Capital/ Hotel Realty, “When this shortfall occurs there are two conclusions based on the specific situation. Foreclosure by the lender may result, or some form of work-out the borrower might be appropriate.”

Moribund cash flow is just a one problem. Another is falling possessions values. The PKF-HR cram foresees hotel property values declining another 20.1% in 2009. This would pursue a 14.1% turn down in property values in 2008.

By 2011, the study predicts, the standard of a U.S. full-service hotel will have fall down 35.4% from its value in 2007. The study also estimates the full-services hotel cap rates will have augmented 240 basis points over the same epoch.

“Given the state of the financial and real markets, we are entering an exclusive period when a solvent borrower might find it more beneficial to default on their credit,” said John B. Corgel, professor of real estate at the Cornell University School of Hotel Administration and also working as Senior Advisor to PKF-HR “With hotel principles on such a precipitous decline, paying debt obligations could be viewed as good money hounding bad money.”

Strategies Hotels Take To Cover Up Crisis:

In early June, the financial research firm declared that May was the “19th month of recession” for the hotel industry. Whilst that is the dour news for the hotels, it has been advantage to their customers. To maintain their shares of the lessening travel tartlet, hotels have had no choice but to pile on the bonuses. Unlike the airlines, which can adjust their capacity subsequent to changes in customers demand by pulling aircraft out of rotation, hotels are stuck with a pretty constant supply of rooms no matter which way the economy turns.

Today, with no conclusion in sight to the recession and a fresh round of hotels endorsements on offer for travel through the summer and into the fall, voyagers have it pretty good; never before have so many hotels tendered so many inducements over such a long period.

Following are some beneficial and inducements methodologies used by various hotels to their customers how will come to visit them in the summer:

Carlson Hotels:

Through August 31, members of Carlson Hotels’ gold-points plus course can earn additional points for the third and subsequent nights at Radisson, Regent, Park Plaza, Park Inn and Country Inns Hotels, 3,000 bonus points for three nights; 4,000 bonus points for four nights; 10,000 points for five nights; 15,000 bonus points for 10 nights and 25,000 bonus points for 20 nights.

Hyatt Hotels:

During August 31, Hyatt Gold Passport members can receive 3,000 US Airways for stays of two or more consecutive nights at any Hyatt, Hyatt Place, Summerfield Suites or Andaz Hotel. That is the six times the normal 500-mile earning rate.

Between August 1 and January 31, program members who stay at any of 19 partaking Hyatt resorts will receive 5,000 bonus points, plus a $150 food and beverage credit for lunch or dinner in partaking hotel restaurants. Use offer DEL5K.

Intercontinental Hotels:

Members of Intercontinental Priority Club Rewards can receive one free night after staying two paid nights at Intercontinental, Hotel Indigo, Holiday Inn, Holiday Inn Express, Crowne Plaza, Staybridge Suites, Express by Holiday Inn or Candlewood Suites Hotels, up to a maximum of four free nights, during July 3.

On the other hand, members can choose to receive double points or miles for the second and subsequent stays at Intercontinental, Hotel Indigo, Holiday Inn and CrownePlaza and for every stay at Staybridge Suites and Candlewood Suites Hotels.

Choice Hotels:

During August 13, members of the Choice Privileges program can receive $50 cash card or doubled points, depending on which of the chain’s hotel brands are used.

The cash card is honored after every third qualifying stay at any Comfort Inn, Comfort Suites, Quality, Sleep Inn, Ascend Collection, Clarion and Cambria Suites property included in the Choice Privileges program.

And for stays at economy and extended-stay brands, program members will receive double Choice Privileges points at Suburban Extended Stay, Mainstay Suites, Rodeway Inn and Econo Lodge hotels in the U.S. and Canada.


In this study we have concluded that how the economical crisis grasps its jaws onto the different industries worldwide, and how to mitigate these crises. The effects caused by the economical crises are bounded these industries to get meltdown, and sociologically these industries fall down from their existing level. Before the economic crisis industries were very much built, but when the crisis strike through the edges of the world these suddenly come down from it position.

The industry which is mostly affected by this economic crunch is the hospitality industry, because after the incident of 9/11 the tourist gets scared to visit out the big places, because of terrorism and avoid to get into the leisure spending out in the utmost beautiful places and stuck in their homes.

In this study we have elaborated that what strategies and benefits were proclaimed by the hotel industries to capture the attention of their valuable customers and how they are encouraging them to locate them in this era of crisis.

Introduction to Current Financial Crisis Macroeconomic Stabilization Theory
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