Friday, October 17, 2008

Big Apples Hotels Are Starting To Slow Down

The city’s hotels, whose 77,000 rooms have been packed with record-setting numbers of visitors from Germany, Hong Kong and Peoria, are starting to feel the slowing economy.

Until recently, tourism had been a bright spot in the city’s increasingly gloomy economic picture, fueled largely by foreign tourists taking advantage of a weak dollar.

But many hotel operators have begun reporting that bookings for the next few months, traditionally the strongest part of the year, are falling below last year’s levels. Cancellations are also on the rise, and corporate travel executives are negotiating for steeper discounts on room contracts for 2009.

“We’re already seeing cancellations,” said Vijay Dandapani, chief operating officer for Apple Core Hotels, which has five budget hotels in Manhattan with a total of almost 800 rooms. “There’s hesitancy in bookings. We hold our breath and fill up rooms at the last minute. Occupancy has been weaker in October, traditionally one of the strongest months.”

John Fitzpatrick, president of Fitzpatrick Hotels, an Irish chain, said that the three hotels he operates in Manhattan were nearly full Wednesday night, but that he was seeing a “slowdown in November bookings, with people canceling or holding back.” He said that he was redrawing his budget for next year in anticipation of a decline, and that he had postponed finishing a $4 million renovation of one hotel, the Fitzpatrick Grand Central.

For the first time since 2001, the effective cost of a New York hotel room for a European traveler is going up, because the dollar has gained strength against the euro in recent weeks, according to the Hotel Association of New York City. At the same time, a recessionary wave has started to move across Europe.

American companies under financial pressure are also placing greater restrictions on corporate travel.

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