Those who think they understand are confused, but…
In time of war… the business life of the community must go on and this applies particularly to the fundamentally vital industry of hotels and catering.
These are not the words of a recent commentator - they are taken from The Caterer and Hotel Keeper immediately after Britain declared war on Germany in September 1939. They might, however, have been written last week. After the terrorist attacks on New York and Washington, US President George W Bush and British Prime Minister Tony Blair have said that we are at war.
It is too early to say what effect this war might have on the global economy and the hospitality industry. Only one thing is certain at the moment - the developed world is in shock, and business confidence has been shaken.
Six days after the collapse of the World Trade Center, the reopened New York stock exchange saw shares tumble. The Federal Reserve cut 0.5% off US interest rates, but the Dow Jones Industrial Average still lost 500 points, or 7% during the day. This is not a good sign for those seeking reassurance that the looming US recession, already on the horizon before last Tuesday, was somehow going to be averted through the sympathy of the markets. Markets do not include sympathy in their range of reactions.
Airlines have been hit already, seeing their share values fall by up to 13%. Anticipating a downturn in passenger numbers, they have cut jobs, with US-based Continental laying off 12,000 staff. This can only be seen as a reflection of an anticipated slowdown of tourism worldwide.
But what of hospitality? In the short term it has reacted with credit. In New York, emergency feeding stations have been set up near the epicentre of the disaster. Elsewhere, extra beds and free food have been provided for stranded passengers at airports; room rates have been cut and cancellation charges waived. Rumours of profiteering appear to be unfounded.
In the longer term, however, the expected shortfall in corporate clients and tourists will begin to bite. It is inevitable that the international conference market will see a decline. Some events may be postponed but others will be lost forever. If hostilities in the Bush campaign begin to affect Middle Eastern countries, the outcome for hospitality could be the same as in the aftermath of the Gulf War in 1991, when the FT Actuaries World Index fell by 20% and hotel shares dropped by a third over six months.
Whether this pattern is to be repeated depends on events that have yet to unfold. For the time being, businesses have to concentrate on their people, both staff and customers. Many are still in shock and will need practical support. Extra security measures, even in hotels not regarded as obvious terrorist targets, will help customers to feel safe. Staff, whether affected directly or not by what has happened in the USA, will need reassurance.
But most of all business confidence needs to be restored. With this in mind, take note of The Caterer in 1939. An advertisement from the Norfolk hotel in Bournemouth read: "War or no war, it's business as usual. There's dancing until midnight. Remember, Britain can't lose - so be cheerful."
Forbes Mutch, Editor, Caterer & Hotelkeeper
