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 in June 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
recently began to change, he said.
"Not only are they seeing cancellations," Kong
said, "but the number of inquiries that have come in have dropped
significantly."
While Kong told BTN
later in the month that the cancellations later subsided, 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
in late May "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 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 after the Memorial Day holiday weekend indicated that 60 percent are
seeing event cancellations as a result of the spill. However, in a survey
update issued by The Knowland Group on July 1, two-thirds of Gulf Coast hotels
reported an increase in bookings as a result of cleanup efforts, and more than
one-third said cleanup-related guests are accounting for more than half their
business.
"We're seeing upticks in demand from consultants and
other types of business," confirmed Richard Kelleher, CEO of full-service
hotel owner Pyramid Hotel Group. Even so, hotel company leaders said the
potential impact on their businesses could be much more significant if the oil
continues to spread to Atlantic beaches.
"As you get further east and around the Keys,
increasingly the markets get bigger," Marriott's Sorenson said. "If
that does come up the East Coast, it becomes that much more disconcerting."
Several hotels on the Gulf Coast have begun offering refund
guarantees on bookings if the beach is closed due to the oil spill, though many
of these guarantees do not include group bookings.
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.
Its impact could be similar to Hurricane Katrina, he said, which caused an
influx of bookings to such nearby locations as Houston and Dallas.
"It warped the market for years," Bennett said. "You'll
have all these travelers that may not go to the Gulf Coast, but usually, they're
not going to just not travel."
This story originally
appeared in the July 12, 2010, issue of Business Travel News.