Travel Industry Experts Weigh In on US Travel Forecasts

June 5, 2008

The travel & tourism trade isn’t bottoming out, not yet, anyway, accordinig to hospitality industry experts. But don’t expect miracle prices (for travelers), or huge profits for most businesses serving the U.S. tourist market, especially.

According to J. Willard Marriott, Jr., chairman and CEO, Marriott International Inc., there is softening in the market right now compared to the first quarter of 2008, but on the very high end, Marriott is developing in Thailand. Marriott hotels is the strongest brand in the chain, and continues to perform internationally amid the weak US economy.

BRIC countries (Brazil, Russia, China and India) are emerging markets that are expected to thrive during the global downturn. International markets may report a 10 percent revenue growth this year, while the domestic market may see revenue growth of 3-5 percent, thanks largely to international markets that are strong due to the weak dollar.

Barry Sternlicht, chairman and CEO, Starwood Capital Group, said the US consumer is stretched and occupancy in US hotels has dropped for nearly two years. Still, hotels raised rates despite occupancy decline. Marketing ploys such as buy one night – get one free, will work only temporarily, according the Sternlicht.

With the right capital structure, the sector can make money 5-10 years from now by building today, as supplies are cheaper now than in upcoming cycles and years.

People will get on the road, and while some may drive rather than fly, they will continue to observe their national holiday travel plans.

The weakening of the dollar has provided a boost for gateway cities such as Orlando where it is very cheap to go to Key West and enjoy the US experience, so there will be some growth and bright spots in US travel, according to industry experts. Leisure and weekend business travel will not be immune to discounts, expected to happen in single digits. The US will still experience a difficult period of time as capital markets have been extremely marginalized.

According to a panel of industry hoteliers, it is going to take approx. 18 months for the market to turn  corners–and it is expected to get worst before it gets better.