Falling Room Rates Threaten To Prolong Hotel Downturn
The downturn in the global hotel industry could be deeper and more prolonged than expected if hotel companies continue slashing room rates. With the world's hotels experiencing falling occupancy levels, particularly in key cities such as New York and London, hotel chains are already seeing their revenues decline. Evidence from 2001 suggests that a short-term cyclical downturn could turn into a long-term problem because once room rates are cut, it can take years for them to get back to previous levels. "Rate discipline is slipping, and is now following occupancy declines," said Evolution analyst Nigel Parson.