2009 State of the Hospitality Industry: Report

The Louisville tourism industry is bracing for a difficult year in 2009. With travel being restricted by city and state governments, reductions in corporate travel and softening leisure travel, 2009 will be a difficult year for the hotel and lodging industry. The domino effect will mean fewer visitors to our area restaurants, attractions and retail outlets.
In 2009 the Louisville Convention & Visitors Bureau (LCVB) will be promoting "Stay-cations" encouraging local residents to vacation right here in Louisville. The impact is being felt by the Louisville Convention & Visitors Bureau as the reduction in travel means a reduction in bed tax collections which is the primary funding source of the LCVB. The LCVB 2008/2009 operating budget is $13.9M. We have already reduced the LCVB's budget by 10% but it won't end there. We are planning for another round of cost cutting measures to go in to effect January 1. Some of those cuts will limit our ability to market Louisville as effectively as we would like.
Current economic conditions have all of us holding our breath as it pertains to the lodging and hospitality industry in 2009.
On December 9, 2008 PKF reported the following in its state of the industry report. "Hotels have entered the initial stages of one of the deepest and longest recessions in the history of the domestic lodging industry according to a new report issued today by PKF Hospitality Research (PKF-HR). The 7.8 percent drop in RevPAR that the hospitality research firm is now forecasting for 2009 will be the fifth largest annual decline in this important measure since 1930. Further, PKF-HR is forecasting that the nation's hotels will not experience a year-over-year quarterly increase in RevPAR until the second quarter of 2010.
The projected seven consecutive quarters of declining RevPAR, beginning with the just reported third-quarter decline of 1.1 percent, according to data from Smith Travel Research (STR), marks the longest stretch of falling revenues endured by U.S. hotels since STR began tracking performance data in the late 1980s."

The LCVB sends a survey to each convention at the conclusion of their conference to determine customer satisfaction which helps us in rebooking meetings and making sure we are providing the kinds of support necessary to our clients. The results from 27 completed convention surveys between August and November 2008 have shown attendance is down 10.2% from their 2007 conference. This trend is likely to worsen in 2009.
Mike Hutya with Recreational Vehicle Industry Association (RVIA) who held their convention at the Kentucky Exposition Center this past December reported that total show attendance was down 38% from last year while total RV dealer attendance was down 39%. Sales of 10' x 10' booths used by companies who supply OEM products, services and accessories were down 13% while RV manufacturer booth sales were down 3%. Mike Hutya said "I anticipate greater declines in booth sales for next year. The last decline in booth sales we experienced was in 1978 through 1980. At that time space sales dropped 10% in 1979 and another 33% in 1980. Therefore, and my show committee concurs, I will plan for a drop in space sales of 35% for next year (2009)."
The Kentucky Department of Education/Kentucky Teaching and Learning Conference informed the LCVB Friday, December 19th that they will not hold their March 2009 meeting in Louisville because of the "current fiscal and budgetary restraints across state government agencies, including local school districts." The economic impact from this cancellation is estimated at $1,985,812. They planned to use 1,355 rooms on peak for a total of 2,931 room nights. The convention was scheduled to be held at the Kentucky International Convention Center and the Hyatt, Marriott and Galt Hotel and Suites were booked for the groups housing package. The Kentucky Department of Education / Kentucky Teaching and Learning Conference have indicated that they plan to return to Louisville in 2010 based on funding approval. The decision to meet in 2010 won't be confirmed until July 2009.

The LCVB is acutely aware of the severe economic issues facing us in 2009. The good news is that we are seeing a significant increase in demand from convention clients interested in booking Louisville for the future. The return of FFA is a strong indicator of things to come. Beginning in 2013 we will be hosting FFA 9 out of the next 15 years with an annual estimated economic impact $40M. Their nine year contract is valued at $360M. The good news is that once we climb out of this recessionary period, Louisville's hospitality industry should be able to bounce back stronger than ever.
— Jim
Comments
Excellently written article,
Excellently written article, if only all bloggers offered the same content as you, the internet would be a much better place. Please keep it up! Cheers.




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