The subprime crisis became a housing crisis which further transformed into a liquidity crisis which is now affecting the hotel industry in the US, in Sept 2009.
This latest article on Bloomberg outlines the crisis surrounding the hotel industry just in the 5 star category. I guess the smaller hotels and motels are having concerns of their own.
The main point that I want to make is that since the global crisis has impacted various sectors over the last 2 years, it will most likely impact other sectors too. For example, the car industry has also been seriously dented around the world, especially in the US.
Countries like Iceland suffered immensely. We have also noted that the travel industry around the world including places as far and wide as India, Cyprus, UAE and Thailand have been impacted negatively.
Many major financial frauds have been uncovered such as Madoff in US and Satyam in India besides Stanford in the US.
In my opinion, there is much more yet to come, in the near future since many able bodied educated workers (both blue and white collared) are sitting idle, job losses in thousands continue around the world, Govt. intervention by printing more money and spending on infrastructure projects will cause serious inflation concerns possibly by next year. Major shipping lines continue to announce that this year's orders are even lower than last year's X'mas orders and many cargo ships lie idle around the world. Meanwhile, oil price continues its upward journey from mid 30 levels to above 70 levels in less than 6 months. Stock markets indicate euphoria which mostly will end up in tears shortly. Whether the stocks decline in Sept...or Oct...or Nov....is anybody's guess. But decline, they must.
It is only to be expected that if hotels are going through rough times due to lack of tourism, then the airlines also must be having cash flow problems when tourism is less and eventually some of them will fold up, sooner or later!
Stay tuned...
Microsoft has had its first annual decline in sales over a previous year, which highlights the point that variety of sectors are getting impacted in unimaginable ways.
Excerpt:
Upscale hotels are suffering from “a heightened focus on prudent corporate travel expenditures,” as well as the pullback in vacation travel, Day said.
Microsoft Corp., coping with its first annual sales decline, said in July it would slash $3 billion in operating expenses, including travel spending.
The number of luxury-brand rooms in the U.S. as of the end of July rose 9.1 percent from a year earlier to 100,000, Loeb said.
Luxury Hotels in U.S. Risk Default as $850 Rooms Remain Empty
By Nadja Brandt
Sept. 24 (Bloomberg)