Rate strategy: bracing for the crisis

Do not give way to panic. This is the watchword of hotel groups as we move into 2009, which all are forecasting as a difficult year. According to World Bank, growth in the global GNP will only be 0.9% next year versus 2.5% expected in 2008. The G8 countries are joining the recession one by one. Most economic sectors were severely affected by the crisis such as banks, insurance companies and automobile manufacturers. This could not remain without any impact on the hotel industry. The MICE segment is preparing to suffer. Business travel and seminars will be affected by drastic cost reduction policies implemented by large corporations. Leisure clientele, while not excessively tightening their belts, think twice before traveling for pleasure. And this travel will probably be for shorter periods and shorter distances.But like all companies, hotel groups will also have to prepare to reduce internal costs without marring the quality of service. No unnecessary spending. Marriott implements good corporate practices itself in times of crisis. “We will not organize major worldwide conferences or large meetings for hotel managers. We will try to limit travel. Essential positions will be replaced, but if the position is not strategic, recruiting for it will be postponed,” explains Gerd Tritschler, preparing to brace against the storm.The negative spiral began this summer. The occupancy of European properties is floundering and Europe’s hotel industry is watching as its revenue per available room shrinks with respect to 2007 – an excellent year it must be said. “We have been feeling the crisis for six months. Actors are no longer applying the same conditions to rates as they did at the beginning of 2008,” observes Etienne Faisandier, director of revenues France and Eastern Mediterranean for Hilton Hotels. More de-pendent on the international economic climate, the upscale hotel industry...