Rising from the ashes

After last September's terrorist attacks on the USA, a couple of blocks away from the World Trade Center site on a restaurant window thick with ash and dust, someone scrawled the word "Unity." It was an emblem for the feeling in New York, and the name stuck. Rescue workers who ate at the restaurant of the Embassy Suites hotel in Battery Park City - which, like others in the area, served as a triage and rest centre - began calling it Unity. And when the hotel reopened in May, the new name became official.

General manager Mark Thomson says that the name characterises the spirit he is now witnessing in downtown Manhattan. "The community has embraced us," he says. "There's a sense of wanting to see a return to normality. People who work near the building want to eat in our restaurant."

In Thomson's words, "the world changed on 11 September". And the USA's hotel industry changed with it. While New York appears to be bouncing back (see left), hotel profits are down nationwide. The ripple effects of one of the blackest days in history - tightened corporate purses, wary travellers, and an economic recession - have hit balance sheets hard. The average US hotel suffered a 19.4% drop in profits in 2001, according to a survey by PKF Consulting's Hospitality Research Group (HRG), with a fall in business travel largely to blame. And while hotels are still making money, this was the first downturn in profitability since 1991 and the largest single-year drop recorded since 1938.

Hotel operators, already anticipating a bad year before the attacks, had started to cut costs early last year. Steps included trimming the middle levels of management, slashing room service hours, and more volume-buying of food. William Hanley, executive vice-president of the American Hotel & Lodging Association (AHLA), says: "The industry, in spite of the hit it has taken, is profitable largely because people were able to react quickly."

Earlier downturn
Hanley says that those in management positions today had witnessed the earlier downturn in the early 1990s. "They were the ones on the front line being asked to cut costs," he says, "so they're better versed today to manage things."

Hotels with more rooms and higher rates have been hit harder, says HRG, resulting in something of a reversal of fortune. Whereas, before, the stiff competition was among limited-service brands, HRG says that these are now performing better than brands at the upper end. Hanley explains: "The road warriors - salespersons or maintenance people - are travelling at about the same levels they were last year, and limited-service hotels have been much less affected by the downturn in business travel."

Following 11 September, the country witnessed a massive "nesting" instinct as people stayed at home, watched TV (mostly coverage of the events), and ate take-home pizza.

Washington DC, the site of the attack on the Pentagon, saw a rise in domestic visitor numbers in the fourth quarter of last year, which the Washington DC Convention and Tourism Corporation (WCTC) puts down to a surge in visits by family and friends. But they stayed with loved ones instead of in hotels, and this, coupled with a sharp dip in business travel, hit hotels hard. In the last quarter of 2001, only 27% of trips to the nation's capital involved a stay in a hotel, motel or B&B, compared with 48% the previous year, according to the WCTC.

The indications are that the nesting continues, with restaurants reporting demand for comfort food and TV networks launching sitcoms with a nostalgic and family focus. According to a report released last month by communications agency Euro RSCG in New York, 39% of Americans are less inclined to travel abroad, and are looking to home, family and friends for "a sense of solace and safety".

Robert Mandelbaum, director of research for PKF Consulting, says that hotel guests are nesting, too. "They're watching movies and exercising in their rooms," he says. "They don't have the expense accounts to go out and have a big, lavish dinner, so they stay in, watch pay-per-view and order room service."

Previous levels HRG says that it doesn't expect a return to previous business levels until later this year, or the first half of 2003.

Room rates are not rebounding, says Mandelbaum, because there is still discounting going on. At Hotwire, a discount Internet travel site, the number of hotel members has grown from 2,000 to 6,000 since last September, and the number of hotel roomnights sold has grown by 310%. "On 11 September, we offered hotels in 43 cities and now we're in 270 cities," says spokeswoman Amy Bohutinsky.

Hotwire, which discounts rooms by as much as 70%, calls itself an "opaque" site - customers don't know their hotel until the time of purchase. Bohutinsky says this means hotels are getting new business from people who may not have visited their own Web sites. "After 11 September, that became more important because the lack of business travellers really drove occupancy levels down," she says.

She dismisses suggestions that this could be just a short-term solution for hotels at a slack time. "Even before 11 September," she points out, "on average, 30% of hotel rooms were empty each night. Hotels will always have empty rooms."

Empty rooms were a fear this week as the US public and industry steeled themselves for a quiet time in remembrance of the attacks. Airlines culled flights in anticipation. "Fortunately, this is not a heavy business or leisure travel time anyway," says the AHLA's Hanley. "But there's a recognition by all parts of the travel industry that you're going to see a dip - 11 September falls on a Wednesday, which tends to be one of the good days for business travel, so it's going to impact a key travel day."

Some hotels will benefit from the anniversary, however. According to spokeswoman Kathleen Duffy, the Red Cross has booked "a lot of rooms" at the New York Marriott Financial Center for families of victims of the attacks.

The Big Apple bounces back

A year after the attacks on the World Trade Center, hotels in Manhattan are reporting not just business as usual but, in some cases, at record levels.

W Hotels' W New York-Times Square opened last December, and on 16 April it reported 100% occupancy. Owner Starwood Hotels & Resorts says that business from nearby TV companies MTV and VH1 has been "especially robust" - the boutique-style brand attracts much of its clientele from the music, fashion and media industries.

According to NYC & Company, the convention and visitors bureau, the average occupancy in New York in March 2002 was 76.8%, less than one percentage point off the same month in 2000, which was a record year for the city. Marriott New York Financial Center, which was damaged in the attacks, reopened in January, repaired and refurbished, and with most of its 400 staff re-employed.

The hotel reopened with 150 rooms, and bit by bit reinstated its 350 remaining rooms as business grew. Occupancy percentage is now in the high 70s or low 80s. The property hopes to pick up a lot of business from the redevelopment of the World Trade Center site.

The Embassy Suites at Battery Park City has seen occupancy percentage in the 70s since its doors reopened on 1 May. General manager Mark Thomson puts this swift recovery down to New York's continuing popularity with tourists, and a patriotism that emerged straight after the attacks. Six new hotels have opened in New York this year, among them the 298-room Ritz-Carlton New York in Battery Park, and the 110-room Doubletree Club Hotel JFK in Queens.

And, says NYC & Company, at least six more hotels, adding 1,800 rooms, are scheduled to open within the next year.