I've always been a glass-half-full person. As the stock market began crashing last year, I laughed at my husband when he suggested we pull our retirement investments. Don't worry, I said, these things always turn around.
As things got progressively worse and the world became immersed in 24-hour doom and gloom, I listened closely. I am not naive but choose to at least hope that those with the rosiest predictions will prove to be right. After all, if you can't change a bad situation, you might as well at least hope for the best.
But when STR President Mark Lomanno, self-professed optimist of hotel industry analysts, announced that he was nearly doubling his projections for hotel revenue declines this year -- just a few months after he and executives like Bill Marriott had whispered about signs of stabilization in the market -- there was no denying that the relentless free fall in rates was taking a very serious and long-term toll on the industry.
In fact, the only chatter as hoteliers calculate their Q2 numbers is very loud concerns that things are going to get even worse for hoteliers before they get better.
"There are a number of things that keep me up at night," Wayne Goldberg, president and CEO of LQ Management LLC, was quoted by Hotelnewsnow.com as telling the Midwestern Lodging Investors Summit last week. "I sleep like a baby: I wake up every four hours and cry."
While the low rates spell great deals for travelers, they are devastating for hoteliers struggling to make debt payments.
In many major markets, leisure rates have now fallen below the "discounted" rates that businesses negotiated for themselves last year. That means that when companies renegotiate their corporate rates this fall, they will be armed with data that will leave hotels little choice but to keep lowering rates.
The main culprit is the continued, dramatic drop-off in business travel, which fell off a cliff earlier this year when politicians and the media went after AIG for continuing with plans to hold a meeting at a luxury resort after taking billions of dollars in federal bailout funds.
The political rhetoric railing against junkets -- greatly exacerbated when President Obama declared, "You can't take a trip to Las Vegas or down to the Super Bowl on the taxpayers' dime" -- has eased, thanks in part to aggressive lobbying by the travel industry.
But its impact appears to be long-lasting and profound.
STR reported recently that meetings business was down 23% domestically, with luxury hotels being hit hardest.
One luxury hotel executive recently admitted privately that the meetings business has been so bad that five-star hotels have lowered their rates to the point where they are competing with Hiltons and Sheratons in desperate hopes of being able to turn that into repeat business down the road.
Indeed, travelers can now find rates at luxury meetings destinations like Colorado's Broadmoor for as low as $125. A new meetings package from Ritz-Carlton has rates as low as $159. And Starwood recently announced a global 50%-off sale at its hotels.
At ski resorts, the newest numbers are just as bad.
In June, occupancy was down 14.5% and room rates were down 10.2% compared with last June, according to the Mountain Travel Monitor, which tracks ski resorts in the Western U.S.
Reservations taken in June for arrivals in the June-November period were down 15.7%, which mimics the booking patterns for the past six months.
And (surprise!) luxury, group and conference travel segments are weakest.
Mountain Travel also said that May-to-October business is continuing to show significant declines from last summer, and advance reservations are down 24%, while room rates are down 15%.
Even the travel industry, which has launched aggressive lobbying and marketing campaigns to get road warriors traveling again, is doing exactly what it's trying to prevent: canceling meetings and offering webcast options.
Earlier this year, a resort conference went Web-only due to a lack of participation, and last month, the Americas Lodging Investment Summit offered a webcast of its "summer update" conference from Los Angeles.
Considering the dismal state of hotel performance, you can't really blame the industry for also cutting back on travel. But it's hard to escape the irony.
Still, I try not to forget the possible good news: The hotel industry historically lags the rest of economy in both declines and recoveries.
Contact Senior Editor Jeri Clausing at [email protected].