Skip to main content

How concerning is the bear market's negative effect on the hospitality and tourism industry?

Image
By

 

By mid-June, the U.S. stocks had fallen 22%, and bonds were down 11% from the beginning of 2022 (Zweig, 2022). Stocks officially entered the bear market territory. On top of that, the Federal Reserve raised interest rates by 0.75 percentage points in June, with the inflation rate around 9%. Nothing is encouraging people to spend more on “unnecessary” leisure activities. 

 

Consumer sentiment is low

 

U.S. consumer sentiment plunged to 50.2 from 58.4 in May (Golle, 2022). Such a record-low sentiment also comes with 40-year high inflation at 8.6%. Compared to the 46% of respondents who attributed their negative views to persistent price pressures, only 13% expected their incomes would rise more than inflation, which was also the lowest share in almost a decade. 

 

Regarding leisure activities, travel conversations on Twitter decreased 75% from April to May (Pitrelli, 2022). Meanwhile, half of the discussions about gas prices and travel were negative.

 

Are people canceling trips?

 

According to a recent TripAdvisor Travel Index, 77% of respondents indicated that they were either “extremely” or “very” concerned about rising costs. Marriott, for example, recorded a 25% increase in revenue per available room in 2022 from its 2019 level during the Memorial Day weekend (Thomas, 2022). The hotel chain’s luxury portfolio also saw a 30% increase in rates in the first quarter of 2022 from its 2019 level. 

 

Still, nearly 40% more people plan to travel this summer than in 2021, according to the same TripAdvisor Travel Index. In another survey conducted by The Vacationer, 55% of participants said they would travel for the 4th of July holiday, an 8% increase from 2021. 

 

Are people changing their travel plans? 

 

While people are not canceling their travel plans entirely, some might have adjusted their travel budgets. According to Zeta Global, 74% of Americans are now actively searching for ways to save on travel. About 25% suggest that they were seeking out cheaper transportation, hotels, or vacation destinations. Additionally, interest in “educational” travel to museums and national parks is down by over 50%, although the demand for “pampering” travel (e.g., spas) is still on the rise. 

 

A Cal Poly Pomona alum told me that he had recently observed more cancelations in his hotel, which is very close to Disneyland. It is plausible that people are finding cheaper alternatives for their Disney vacation. 

 

It is unfortunate that people usually cut their expenses on travel and leisure activities first when they feel uncertain about the economic outlook. How concerned are you about the bear market’s negative impact on the hospitality and tourism industry?  

 

References

 

Golle V. (2022, June 10). U.S. consumer sentiment slumps to record low on rapid inflation. Bloomberg. Available on https://www.bloomberg.com/news/articles/2022-06-10/us-consumer-sentiment-slumps-to-record-low-on-inflation-woes.

 

Pitrelli, M.B. (2022, June 15). Travelers are upset about rising costs, but most aren’t canceling their plans just yet. CNBC News. Available on https://www.cnbc.com/2022/06/15/travel-costs-are-up-but-travelers-arent-canceling-their-plans-yet-.html. 

 

Thomas, I. (2022, June 11). Why Marriott, Hilton and Hyatt say hotel prices are only going up. CNBC News. Available on https://www.cnbc.com/2022/06/11/why-marriott-hilton-and-hyatt-say-hotel-prices-are-only-going-up.html

 

Zweig, J. (2022, June 17). How to stand up to a bear market. The Wall Street Journal. Available on https://www.wsj.com/articles/how-to-stand-up-to-a-bear-market-11655477101.


Note: This article was first published in the Hospitality News Magazine; The picture was downloaded from The Wall Street Journal. 

Labels:

Comments

Post a Comment

Popular posts from this blog

Is It OK for Hotel Staff to Wear Piercings and Tattoos?

By
Time has changed. I see more and more college students wearing piercings and tattoos nowadays, but is it OK for hotel staff to wear piercings and tattoos? The answer is “no, no, no.” According a report at USAToday.com, customers across the board do not want to see any hotel workers with pierced eyebrow, pierced tongue, tattooed arm, or nose ring. Some may argue that tattooed and pierced workers may seem more acceptable in edgy boutique hotels as compared to the big franchised hotels, but the survey results did not find any differences among a variety of lodging products. Many respondents believe people who wear visible tattoos and piercings are taking a high risk of their professional lives. If you stay in a hotel, do you mind being served by tattooed and/or pierced staff? What if you are the one who makes the hiring decision? References: USAToday.com: http://tinyurl.com/linchikwok08042010 Picture was downloaded from http://tinyurl.com/linchikwok08042010P
28 comments
Read more

Where Coffee Meets Culture: My Experience with Orientation, Socialization, and Culture at Dutch Bros (by Karina Martinez)

By
When people think of Dutch Bros, they usually picture colorful drinks, loud music, free stickers, and baristas so friendly they’ll jump in the car with you.  As someone who has had the opportunity to work for Dutch Bros, I can say that the energy customers feel isn’t an act; it is the result of intentional and effective HR practices that are focused on orientation, socialization, and culture. From your very first day, you experience how these practices shape the entire Dutch experience.  Orientation, Socialization, Culture   In HR management, orientation is the introduction of the role and company to new hires. This is intended to help them feel welcomed and informed. Socialization goes beyond the initial training process; it’s how new hires grasp the organization’s values, behaviors, and traditions over time. Together, these fun...
5 comments
Read more

Average/Below-Average Looking People Can Earn as Much as the Attractive Ones

By
Research has shown that attractive people can not only charm interviewers (and thus get hired easier), they are also more likely to earn more as compared to those with average or below-average looks. Accordingly to a Wall Street Journal report , attractive people can earn 3% - 4% more than a person with below-average look. If such difference adds up over a person’s lifetime, an attractive person can earn up to $230,000 more than an ugly worker; even an average-looking person can make $140,000 more. Another relevant Wall Street Journal report also suggests that workers who exercise regularly can earn 9% more than those who do not. If that is the fact (I believe it is), is it legal? Can employers do that? Linchi Kwok and Otto @SyracuseU Career Fair To my knowledge, no law or regulation under EEOC (Equal Employment Opportunity Commission) considers a person’s look as a protective class. It is true that people in general have an idea of what kind of person they feel attract...
33 comments
Read more