Why hotels are well placed to stay profitable

Five reasons why the hotel sector will remain resilient

Research analysts at PKF Hospitality Research put forward five reasons why hotels will survive the ongoing economic turbulence. Firstly: corporate profits. Despite uncertainty about the future, the private sector will likely remain resilient. Business travel will go on, as corporate profit growth continues as expected throughout the 2011-2015 period. Second, ongoing economic and social problems like unemployment are not going to have a negative effect on the hospitality industry. However, economy hotels may suffer; the higher the average daily rate, the better the hotel’s performance.
Third, the stagnation of GDP in the western world mostly reflects shortfalls in state and municipal government spending – and people in these areas proportionately don’t travel a great deal. Fourth, hotel rates are likely to remain affordable, staying within the boundaries of inflation. Limited ADR growth will help protect hoteliers from any sudden economic shocks. And finally, for those who are employed, personal income is forecast to grow, slowly but surely.
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[pictured: Capitole Square, in front of Crowne Plaza Toulouse; courtesy IHG]