Thursday, July 17, 2008

Those wacky airlines

It seems like an awful lot of hoteliers are talking about airlines these days. It's sort of a trickle-down effect. High oil prices are putting an awful lot of hurt on the airlines, so they're reducing flights and capacity, if not just plain going out of business.

A recently publicized Open Letter to All Airline Customers, signed by 12 airline CEOs, blames a portion of the oil price hikes on unnecessary speculative costs ... maybe as much as $30-60 per barrel. Readers are sent to this website. I was curious to see if any hotel chains were among the list of supporters. I didn't see any, but did see AH&LA listed. Should we, as an industry, join in on this effort?

The other item that comes to mind is the recent PKF study, which found (surprise) that U.S. hotels are extremely vulnerable to sharp declines in airline capacity. The report's points include:

• U.S. hotels could face a decline in lodging demand greater than that experienced during the turmoil following the terrorist attacks on September 11, 2001.  Under a worst-case scenario, a 1% decline in the number of seats flown within the U.S. will result in a 0.39% decline in the demand at the nation’s hotels. 
• A 3.9% reduction in lodging demand for the year would translate into approximately 40 million fewer room nights occupied, or $4.3 billion in revenue, on an annual basis.
• Airlines are eliminating flights that are in least demand and lowest in fuel efficiency. Some portion of the demand that would have booked a flight that is no longer available will simply adjust the timing of their travel plans. Trips will still be made.

Many attendees at the NABHOOD summit here in Atlanta voiced their concerns about rising oil prices. But in reality, no one knows whether any of the solutions commonly expressed—from going to alternative energy sources to more offshore drilling—will change things in the manner we hope they will. There are no easy answers. What are your thoughts? What can our industry do to help?

(An interesting side note from the NABHOOD conference here today ... someone I was speaking with made an interesting comment about economy hotels. Many are located along interstate highways. While we tend to think about high gas prices affecting the traveler, and that affecting road trips, and that affecting the hotels, there's another angle. Many jobs at these hotels are at or near minimum wage. The workers often don't have public transit options, given the fact that these hotels may be somewhat remote. So those workers, too, are being squeezed in a particularly uncomfortable way.)

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