It's too early to know how big of an impact the Gulf Coast oil spill will have on business, according to multibrand hotel company chief executives, but it could be considerable if the spill spreads to the East Coast.
Best Western International president and CEO David Kong, speaking this week at a press briefing at New York University's International Hospitality Industry Investment Conference, said he was concerned about his company's coastal hotels. While they had been reporting bookings as usual, that began to change last week, he said.
"Since Friday, they've had tremendous cancellations," Kong said. "Not only are they seeing cancellations, but the number of inquiries that have come in have dropped significantly."
Some hotel chief executives said imagery is having the biggest impact on bookings. Marriott president and COO Arne Sorenson said the photos of oil-covered storks last week "brought the tragedy home in a way that it hadn't been before," and InterContinental Hotels Group chief executive Andrew Cosslett said the webcam shot of oil gushing into the Gulf also plays a role in disrupting bookings.
"If they can get it capped, and we stop seeing that webcam shot and start to see some solutions coming in and get to work on the recovery, people will show their support," Cosslett said. "The next few weeks will be critical."
A survey of 50 coastal hotels in Louisiana, Mississippi and Alabama last week
indicated that 60 percent are seeing event cancellations as a result of the spill. Hotel company leaders said the impact could be great, however, if the oil continues to spread to Atlantic beaches.
"As you get further east and around the Keys, increasingly the markets get bigger and bigger," Marriott's Sorenson said. "If that does come up the East Coast, it becomes that much more disconcerting."
Monty Bennett, CEO of upscale and upper upscale hotel owner Ashford Hospitality, said he expected that regardless of the oil spill's impact, it would not reduce overall demand but rather would shift it elsewhere. He said its impact could be similar to Hurricane Katrina, which caused an influx of bookings to such nearby locations as Houston and Dallas.
"It warped the market for years," Bennett said. "Depending upon how much of a natural disaster this might be, you'll have all these travelers that may not go to the Gulf Coast, but usually, they're not going to just not travel."
For the hotels along the coast, demand from workers and cleanup crews could mitigate the loss of bookings from group travel and tourism, said Richard Kelleher, CEO of full-service hotel owner Pyramid Hotel Group. "We're seeing upticks in demand from consultants and other types of business," he said. "It's a difficult set of circumstances."