Travel Companies Grapple with 'New Normal'

As the recession sapped demand for travel, hotel operators got creative. They shut down restaurants, closed floors and even cut back on newspaper delivery to ride out the downturn.

Reuters Hotel heavyweights Marriott International (MAR.N) and Starwood Hotels & Resorts (HOT.N) have since noted signs of a nascent recovery in travel demand. Companies are sending employees on business trips again, even if they are openly pinching on travel budgets, and hotels are fuller.

The central issue now for hotel operators is room rates. Hotels cut prices for their U.S. rooms an average of nearly 9 percent in 2009 and are expected to cut them another 2.1 percent this year, according to PricewaterhouseCoopers LLC.

Will hotels be able to command the rates they once enjoyed in the heady days of 2007 or has there been a paradigm shift in the way people spend on travel?

"That's the $1 million question," said Choice Hotels International (CHH.N) Chief Financial Officer David White in an interview.

White says the severity of recession has recalibrated how companies and vacationers think about travel spending. They're likely to gravitate toward good deals.

"The great recession has scarred many people and it may take a while for them to come out of their shells and decide they're willing to go more upscale with their purchases for hotels, for TVs, anything," White said.

"That pursuit of value by consumers is not going to go away easily or soon," he added.

External Source - For the complete article click here. Source - Reuters

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