Literary Review Applied Research 13 March 2013 Economic Recession Affects Present and Future of Luxury Hotels This paper will discuss how economic recession affects present and future of luxury hotels. Society has been affected on all levels by the economic recession beginning around 2007 2008, including the hotel industry. Through this economic recession, the industry has seen the effects on business and leisure travel. While corporate travel has been more affected by the recession, leisure travel to luxury hotels has been affected in a way “more pronounced than one might expect” says Mark Lomanno, President of Smith Travel Research (2008). The changing climate of the travel industry has affected the type of guest which also affected the sales and marketing of these luxury businesses. To balance out revenue loss and expenses, hotels and resorts must alter their budgets. Although the rate of luxury hotel development has slowed in the United States, the rates of new developing resorts have not slowed as much throughout the rest of the world. The purpose of this research is to explore how the luxury hotel industry has and should deal
with the harsh economic times and the future of the changing market. In economics, a recession is defined as “a business cycle contraction, a general slowdown in the economic activity” (Gassan). GDP, employment, investment, spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and unemployment rate rise. They generally occur when there is a widespread drop in spending which can be triggered by events like a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. The type of leisure guest is now changing in response to the changing times. Many luxury guests who once searched for hotels or resort that would “pamper” them are now searching for a hotel that can provide them with something more. In a Luxury...
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