Luxury hotels are the elite athletes of the hospitality industry, superstars with iconic status and loyal fans. In 2009, though, arguably one of the worst years on record for the U.S. hotel industry, luxury's muscle and resolve were sorely tested. Most properties struggled to maintain their status quo, and many found themselves burdened by financial woes on an unprecedented scale. Some players, industry experts predict, might never recover. Yet, as 2010 unfolds, executives of luxury chains are optimistic that the worst is over, and they are actively planning for the inevitable economic rebound.
"Last year, meetings was a dirty word, right up there with banker bonuses, and the AIG effect was on the news every night," says Frits van Paasschen, president and chief executive officer of White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide. "Today, the paranoia and taboo around resort and luxury destinations for meetings is subsiding. For example, at the Phoenician in Scottsdale, the very definition of luxury, group room nights [for first quarter 2010] are up 32 percent from last year."
Simon Cooper, president of the Ritz-Carlton Hotel Co., agrees with van Paasschen's assessment. Last year, he notes, group business at the Washington, D.C.-based luxury chain's North American hotels, which account for 40 percent of total revenue, literally dried up overnight.
"A big sucking sound was heard around September 2008, as we inhaled and held our breath when the financial crisis first broke," says Cooper. "Then the daily media and the political campaign against ‘luxury' meetings began, and financial companies, our biggest clientele, pulled all their meetings."
But, Cooper believes an upward trend is definitely afoot. Business from the financial sector is gradually making its way back onto Ritz-Carlton's books. "When we come out of the first quarter of this year, we will be well ahead of last year," Cooper told M&C in late February.