One sign this recession is different from those that came before it is that the high-end markets are some of the slowest to come back, at least in the hospitality industry.
Local hoteliers, restaurateurs and other hospitality industry leaders said at a Daily Transcript roundtable discussion Tuesday that people are slowly starting to come out of their homes and even travel again, but businesses that relied on company meetings and “expense account” spending are still struggling to get back what was lost when the stock market tumbled in 2008.
“Higher-end restaurants, certainly expense account restaurants, have suffered during this economy, no question about it,” said David Cohn, president and founder of CRG Restaurant Group. “Our weakest point is really the Gaslamp Quarter and downtown, where obviously conventions have been impacted.”
Cohn pointed out that it's not quite as simple as saying one price point restaurant group is doing better than others. He said most mid-level establishments in general are struggling, and in some cases luxury has proven as recession proof as ever.
Todd Shallan, general manager at the Hotel del Coronado, said the landmark’s beach village product, which generally attracts wealthy leisure travelers, is experiencing 15 percent growth this year. The trouble is most specifically in the market that used to be frequented by business travelers or diners.
The leaders at Tuesday’s discussion said this was partially due to companies making necessary cutbacks at a time when business is slow, but they felt it's also due in part to a public relations strategy. After Congress scolded major companies like AIG for lavish company meetings, some companies have cut off all meetings and reduced spending accounts.
“Our public cruises, our public offerings, are holding relatively well. But the other segment, the other 50 percent of our business, is about corporate meetings and events, which is still very, very tough,” said Jim Unger, vice president of Hornblower Cruises & Events. “Companies still, due to their perception issues more than budget issues, are staying clear of certain types of events because of scrutiny by press or government or whatever it may be.”
John Gates, general manager of the Rancho Bernardo Inn, said he’s noticed companies booking events with a much shorter lead time. Meetings that once may have been planned years in advance are now only being planned one year in advance, and even that is rare. Generally, the planning is a matter of months or even weeks.
“(Companies) won’t come out and say it, but you can read between the lines and they’ll say, ‘We waited to see how we were doing, and from an image standpoint, we didn’t want to throw this out to our shareholders,’” Gates said.
The hospitality industry is trying to work with the meeting industry on how to convince companies to get back to spending, if they can. Shallan said the Hotel Del is starting to see some of it coming back already. June of this year has been a record group production month.
“It’s (coming from) all over. It’s regional, it’s national, it’s sales meetings, it’s training meetings, you name it,” he said. “Businesses are starting to realize that you’ve got to get out and start meeting people. Not only customers, but internal sales meetings.”
But Shallan acknowledged that this record-breaking June comes off the heels of the one of the Del’s worst years ever. The outlook is still mixed at best.
Leaders saw some hope in the fact that people seem to be back to spending money on leisure vacations and going out to dinner, even if they making grabs for recession deals. They hoped that this would eventually lead to businesses acting in a similar fashion. They said the lack of major conventions at the San Diego Convention Center has been tough for hotels and restaurants beyond the Gaslamp Quarter, and they hope that will pick up.
“We just pray for a couple more Comic-Cons,” Shallan said.
Mohsen Khaleghi, general manager of the Hyatt Regency Mission Bay Spa & Marina, said that San Diego Mayor Jerry Sanders has put the word out to local businesses asking them to hold dinners and meetings locally, and that has helped. The leaders all said they wish more political leaders would encourage the same thing, rather than just pointing out the companies that flew private jets to ask for government bailouts.
“I think we feel as though the worst of it is over but that we’re kind of bouncing along the bottom, and we’d love to see a little leap rather than the bounces that we’re seeing,” Cohn said. “We’d love to see some leadership, both at a state and federal level, to say that things aren’t that bad. If it’s 10 percent unemployment or 11 percent, that means 90 percent of people are working or 89 percent of people are working, so why don’t we reverse some of these things and talk about the positive?”
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