NEW YORK >> Starwood Hotels & Resorts Worldwide Inc. may cut jobs, Vail Resorts Inc. is waiving cancellation fees at its ski slopes and MGM Mirage will focus sales efforts on gamblers within driving distance of its casinos. Resorts prepare for war
U.S. tourism companies are readying
to deal with the effects of a dip in
travel during an attack on IraqBy Jeannine DeFoe
Bloomberg NewsThese are some of the contingencies that U.S. hotel, casino and travel-related companies are readying to blunt the effects of a likely dip in travel during a U.S.-led war on Iraq. President George W. Bush Monday gave Iraqi leader Saddam Hussein until tonight to leave the country or face an attack, while U.S. officials raised the nation's terrorism threat level to "high risk" before a potential conflict.
Companies' moves to lure customers while cutting expenses would echo what they did when travel plunged after the Sept. 11 terrorist attacks. PricewaterhouseCoopers estimates an Iraq war lasting four to six weeks would result in 50,000 fewer hotel rooms booked and sold, which would worsen a two-year slump in business travel caused by the 2001 attacks and a lackluster economy.
"We have a contingency plan," said Barry Sternlicht, chairman and chief executive of Starwood, which is considering staff reductions at its Sheraton and other chains after slashing 10,000 jobs following the Sept. 11 attacks. "It's an interesting opportunity for us to rationalize some cost structures that may be out of whack," he said yesterday at a Salomon Smith Barney real estate conference in Naples, Fla.
MGM Mirage and Park Place Entertainment Corp. would step up marketing to gamblers in California who can drive to Las Vegas casinos, which include Bellagio, Bally's and New York-New York, the companies said. Carnival Corp., the largest cruise ship company, is cutting prices on trips in the first half of the year to lure travelers reluctant to book, and rival Royal Caribbean Cruises Inc. is easing trip cancellation penalties.
While most analysts expect a brief Iraq war lasting no more than about six weeks, a conflict lasting more than 90 days may cut hotel demand to levels seen after the terrorist attacks, PricewaterhouseCoopers said. Hotels suffered the worst demand in 34 years after the attacks, with revenue per room falling 11 percent from 2000, the firm said.
A looming war and lukewarm economy is already leading leisure travelers to postpone vacation plans, analysts said. Average hotel room prices in Las Vegas fell 10.4 percent for stays in March and 3.5 percent for trips in April, J.P. Morgan Securities analyst Harry Curtis wrote in a report.
Walt Disney Co. Chief Executive Michael Eisner told Bloomberg the number of travelers flying to Walt Disney World in Orlando, Fla., is softening. By contrast, business at Disneyland in southern California is "booming" thanks to increased demand from travelers who are driving to the theme park.
A resolution to a conflict in Iraq may spur an increase in trip bookings, as travelers revive plans put off by the war, said Roger Cline, head of consulting firm Roundhill Hospitality. Business travel probably won't recover because companies are still slashing trip budgets.