Roland OBERMEIER, regional vice president sales & marketing, Kempinski Middle East & Africa, said that they expected the hospitality industry will be affected by the economic crisis similarly to how it was affected after 9/11, with business travel in particular slowing down temporarily.
“Companies may review their need to travel, in light of budget cut backs and possibly even potential job cuts. Although business travellers will be slowing down throughout the remainder of 2008 and during 2009, Kempinski’s portfolio is now diversified in terms of city and resort locations, the group benefits from the traditionally strong leisure segment, which reduces any possible impact,” he said.
However, he pointed out that as a hotel management company active internationally, Kempinski was confident that not all regions would be impacted equally or even at the same time; hotels in China and the Middle East were likely to be less affected than hotels in Europe or in the United States, a market where Kempinski is not present.
“There will be a short term worldwide downturn in demand for hotel rooms, which Kempinski, like all other hotel groups, will be affected by although the group has not seen any dramatic turndown in sales so far. Given the volatility of the markets right now, it is hard to assess the extent or impact of this downturn in demand.”
RETO WITTWER, president and CEO of Kempinski said, “Kempinski’s expansion plans are unaffected; we believe in the future success of our industry and we will launch all hotel openings as scheduled.”
A further 40 hotels are scheduled to open under Kempinski management within the next three years. Wittwer said, “One of the biggest problems is lack of confidence in the markets or the short term future, yet we are confident about the future and we believe Kempinski’s long term growth strategy will resist this economic crisis.”
Kempinski will continue to maintain its strong market position wherever the group operates a hotel. “Kempinski delivers luxury. True luxury comes at a price, we will not reduce the quality of our services or layoff staff. I believe that we need to retain our optimism; there will continue to be demand for hotel rooms and Kempinski is well positioned to weather this crisis,” said Wittwer.
Obermeier said that regarding occupancy levels in the Middle East properties, corporate stays had been affected more than leisure stays, and that business travellers might consider using video conferencing or other ways of communication to reduce travel frequency.
“However people will still go on their well deserved vacations. The main change here is the ‘hunt for bargains’ leading to a very last minute pick ups in some leisure driven destinations, while our efforts in many hotels is more to reward early bookers enabling us to manage inventories better,” he said.