Economic slowdown hits hotels and airlines hard

Hotel News - 28/02/2008

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The global credit crunch and economic slowdown is taking its toll on companies around the world, leading them to tighten travel budgets and ease up on expensive first class seats, luxurious airport hotels and even car hire from airports.

In America, it is domestic airlines, as well as the service industry which generally thrives around airports which will feel the impact the most.

An estimated 4 per cent of all workers in the States are employed in hotels, car rental companies, and restaurants, all of which stand to suffer if economic conditions continue to worsen.

While businesses are still sending employees out on the road, more and more companies are keeping tabs on spending. Instead of being able to pass off a night in an airport hotel, employees are being forced to stick to rules requiring they stay in pre-approved accommodation and even double up on rooms with co-workers.

Industry experts say that airline bookings don’t generally tend to suffer until economic conditions have worsened more significantly than they have to date. Until that time, businesses are likely to continue traveling in order to get new business rather than retire to cut costs and risk having another company steal their potential business.

And while businesses might be doing their best to cut costs, leisure travelers are still hitting the road as well. Leisure travel generally tends to be the most affected by negative economic conditions, however experts in the industry claim that bookings in that sector have remained constant over the past year.

That’s good news for airport hotels, car hire agencies and airlines, who can only hope that the economic downturn turns around soon.

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