Most hotels likely to see occupancy rates fall next year

The backlash — the "AIG effect" — was surprisingly swift, he says. The average occupancy rate for luxury hotels dropped by nearly 12%, and rates dropped by more than 5% for the first four weeks of October, vs. an 8% occupancy drop and less than 1% rate drop overall, he says. The financial, insurance and real estate industries "specifically are going to be very, very careful (about) how they spend their money and what the public perception is," he says.

•Smaller hotel staffs. As they accommodate fewer guests, hotels are cutting payrolls. According to the Bureau of Labor Statistics' October jobs report released last week, the hospitality sector shed enough jobs to cause unemployment for the sector to soar to 8.9% — the highest rate for an October this decade.

Business travel is forecast to decline by nearly 4% this year, and another 3% next year, the Travel Industry Association said in its annual forecast last week. It isn't expected to recover until 2010.

"We all know businesses are having to make decisions to scale back in this current environment. Business travel is no exception," says the TIA's Suzanne Cook.

Internal meetings, such as visits to headquarters, are especially vulnerable, because they're easy to replace with Web meetings or teleconferences, she says.

In its business travel forecast to be released today, the National Business Travel Association says that 81% of its corporate travel managers expect technology to replace trips. Three out of every four respondents reported an uptick in teleconferencing alone.

Charles Emnett, a self-employed health care consultant based in Spring Hill, Fla., typically stays at Hilton Homewood Suites, Hampton Inns and other hotels for stretches of as long as three weeks at a time at client sites. But next year, he expects to do more work using conferencing technology to curb travel costs. He welcomes the change.

"Do I really like to spend 200 nights a year in a hotel room? Not particularly," Emnett says.

TELL US: Is your company cutting business travel for 2009? If so, will conferencing technology be used more to compensate?

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