While the upheaval in the financial world in the past several weeks is likely to mean rising unemployment and a possible recession, the financial services industry is sure to be hard hit. And that means more uncertainty for meeting and corporate travel departments in that sector.
The situation is so uncertain and subject to change that the American Express 2009 Global Business Travel Forecast, scheduled to be unveiled today, has been pulled back and won’t be released for several more weeks.
It is unclear how many financial services sector jobs will be lost in the coming months, but in the past year, U.S. financial firms downsized by 200,000 jobs, according to the Bureau of Labor Statistics. Last week, New York Gov. David Patterson issued a statement reporting that about 40,000 jobs in the New York City area can be expected to be lost in the current downturn.
As for the immediate impact on meetings and travel, Bjorn Hanson, clinical associate professor at New York University's Tisch Center for Hospitality, Tourism, and Sports Management, wonders whether there is really any more room for corporate America to maneuver. “Business has already reacted,” says Hanson. “Travel policies have already been revised to be more restrictive, and they’re being vigorously enforced. So we might see less of an impact than we would normally anticipate.”
Still, says Hanson, “my sense is that if you called up the major hotel chains today, they’d report that room cancellations have increased across the board [leisure, group, and business markets].”
Brad Garner, vice president of operations and client services for Smith Travel Research, says that when it comes to the hospitality sector, “the bottom line is that demand is soft and that we’re going to experience continued uncertainty.”
Garner also senses that the terms seller’s market and buyer’s market don’t seem to apply in the current situation. Pointing out that the industry is now in the middle of the fall RFP process for meeting planners and travel buyers, Garner says that he hears that there is “a lot of communicating going on” between the hotel chains and the buyers, and that they are “meeting somewhere in the middle.”
What differentiates this downturn from that of 2001-2002, says Garner, is that there is no rampant discounting going on, and that buyers aren’t expecting to get those huge discounts they negotiated back in the days following September 11, 2001. “Those industry chains and independents learned their lesson,” Garner says. “Discounting doesn’t create demand, it just shifts it around.”