Hotel occupancy rates inspire glass-half-full optimism.
"Even if the numbers will continue to go down at the same rate for the rest, of the year, we will still be far ahead of 1999," she said. "I, personally, am not overwhelmingly worried about this market."
According to this hotel expert, the principle reasons for the disturbing change in the lodging market statistics include a slowing national economy and the absence of adequate product for leisure travelers. In the first case, the hotel owners would have to just wait it out. In the second, however, Lloyd-Jones advised that some measures should be taken to bring the tourists from New Jersey and the outer boroughs back into the heart of New York.
"Most obvious reason [for the downfall] is the current economic condition," she noted. "Cutting back on travel is one of the easiest ways for businesses to save money. But the reliance on corporate travel also affects leisure travel. In Manhattan, because the demand has been so strong lately, hotels concentrated on business travel and corporate groups. The bulk of the Manhattan hotels has turned their backs on the leisure segment. And where are those people now? Across the river, in New Jersey."
But there is a solution. Hotel owners would be wise, Lloyd-Jones noted, to start offering tour packages again and cut down prices. "Manhattan hotels pursued some pretty aggressive pricing policies and that deterred a lot of people," she said. "So the obvious answer to the problem is to widen the level of business and lower the rates. You do see rates diminishing and better deals out there already, but the thing is, it will take time."
At the same time, Lloyd-Jones pointed out that the biggest drops in occupancy rates seem to be behind us holding a promise of a quick recovery. Citing that occupancy was down by 7 and 8% in the first quarter of 2001, but bounced back to just 3% in May, she noted that "The magnitude of the drops is diminishing. That may signal that we've hit bottom in terms of how much revenue we can use."
However, "Even if the worst is behind us, the aftereffects will linger for a while," she warned.
"It comes down to whether you want to see it as a-glass-half-empty or a glass-half-full scenario," Lloyd-Jones said in conclusion. "We are still holding steady at a 75% occupancy rates. We are not seeing hotels that are losing money.
"Maybe people are not making as much money as they would like, but they are still making money."
The meeting took place at The Sky Club on July 10.
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|Publication:||Real Estate Weekly|
|Date:||Jul 18, 2001|
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