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The New York Times
January 27, 2009 Tuesday
The New York Times on the Web
Luxury Hotels Are Feeling Economy's Pinch
BYLINE: By JOE SHARKEY
SECTION: Section ; Column 0; Business/Financial Desk; ITINERARIES; Pg.
LENGTH: 1200 words
The hotel business has collided head-on with the bad economy and the tight credit market.
Hotel revenue is down sharply. Big new projects, planned in the boom days, are either sitting unfinished or left on the drawing boards. And some high-end hotel owners now face an unhappy situation -- how much can they cut prices to fill their rooms before they damage their hotels' luxury cachet?
''I don't think anybody realized the switch was going to be turned off so quickly,'' said Lisa Grossberg, the general manager of the Buckingham Hotel in Midtown Manhattan. ''We saw people being more rate-conscious; we saw the renegotiations of corporate contracts as companies tightened their belts in the fall. But then in the middle of December, everything just about stopped.''
Numbers from Smith Travel Research, the leading hotel research company, show just how tough times have become for all hotels. For the week of Jan. 11 to 17, the average revenue per available room -- the standard measure of hotel performance -- fell 16.4 percent over the comparable week in January 2008 in hotels in the United States. Average occupancy fell 12.9 percent, and average daily room rates declined 4 percent.
The figures for luxury hotels were even bleaker. Occupancy rates fell 24.4 percent in the week that ended Jan. 10 compared with the first week of January 2008, Smith Travel Research found. Average daily rates fell 8.9 percent.
Many of the same forces now hitting the bottom lines of luxury hotels have affected other segments of the luxury market -- from top-end department stores to private jets -- as the rich feel the pain of the stock market collapse and cut back on spending. Luxury hotels are heavily...