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Issue 37/ 36/ 35 : November 19th 2008

The economic challenge

The financial crisis is finally moving out of the headlines. Unfortunately, it is because of the developing economic gloom rather than any formal conclusion to the financial problems.
    Hotel investors, already battered by the tighter credit conditions, now face the prospect of a long and deep recession.

Liquidity remains the issue

The prevailing orthodoxy about the current recession is that it will long and deep. This was only helped by news last week that UK property values fell by the biggest amount ever in a single month during October, an eye watering 4.3%.
    But just as the boosters were wrong about asset prices always heading north, the doomsters may be just as wrong about how long the recession will last. Perhaps, by having such a sharp drop in values, a long, lingering decline can be avoided.

Sharp trading downturn in October

October has brought a sharp deterioration in trading for hotel operators with both InterContinental and Millennium & Copthorne reporting negative revpars in the month.
    IHG said that global revpar in October was down 4.5% and down 5.7% in the US. M&C said revpar was down 3.0%.