Hospitality industry feeling the pinch of economic downturn

Rising costs and falling share prices brought about by the downturn in the economy are forcing businesses to reassess their travel expenditure, resulting in the Australian hospitality industry having to cater for the new ‘budget executive’.

While consumers struggle with a 12-year high in interest rates, record fuel prices and rising food costs, businesses are seeking to tighten their belts to cope with the resulting drop in consumer demand.

The ensuing impact on the hospitality industry is causing hotels and corporate travel providers to rethink the way they cater for corporate travellers, with many no longer willing to pay for the luxury of an expensive hotel suite.

Metro Hotels has more than 800 rooms in hotels, apartments and inns nationally providing all standards of accommodation and it is finding many corporate clients can no longer afford to accommodate their staff in high-end hotel rooms and are instead opting for comfortable, convenient and affordable accommodation.

Metro Hotels Chief Operating Officer George Bedwani said while the number of guests booking into Metro’s national accommodation network has not fallen in recent months, the Group has experienced a trend towards corporate travellers seeking lower cost accommodation and staying fewer nights.

“Companies recognise the value of face-to-face meetings in securing new business, and of professional staff attending conferences to network and upgrade their knowledge and skills,” Mr Bedwani said.

“Professionals are still travelling interstate and internationally but companies are looking at smarter ways to reduce their costs without adversely impacting potential business opportunities.”

“Metro Hotels is receiving more requests for standard or budget rooms and finding business travellers staying for fewer nights as they seek to fit more meetings into shorter stays.”

Mr Bedwani said the impact on the hotel industry meant that standard rooms, which used to be the last rooms to sell, are now in high demand. For businesses, the result is more achieved for less cost in a tighter timeframe. For the business traveller, it may mean a more gruelling trip trying to pack more meetings into a shorter time.

Predicting tougher economic conditions would trigger a rise in demand for its standard hotel rooms, Metro Hotels last year conducted a major refurbishment of its budget rooms in one of its popular hotels for business travellers – Metro Hotel on Pitt in Sydney CBD.

“Corporate clients are realising that a conveniently located hotel providing a comfortable bed and a hot shower is all they require when they are spending more time in meetings and less time in their rooms,” Mr Bedwani said.

“This particular hotel’s location at 300 Pitt Street means it is conveniently positioned in the Central Business District, within walking distance to the financial district, government departments and Sydney’s most popular conference venues.”

“While companies recognise the need for staff to continue to travel for business, many can no longer afford for them to stay in five-star accommodation.”

“More and more corporate travellers are choosing to stay in 3 to 4 star accommodation, enjoying the comfort and convenience of a quality hotel room without the high price tag.”

Metro Hotels is a division of Metro Hospitality Group, the public face of Transmetro Corporation Limited.  Transmetro Corporation Limited is an Australian owned public company listed on the Australian Stock Exchange. The Group currently provides a national accommodation network of properties, with over 800 rooms in key locations and major cities across Australia. 

A Report by The Mole