There�s no question that the terrorist attacks of September 11 accelerated existing recessionary trend lines and delivered the greatest shock to the lodging industry since the 1930s.

The staff at Lodging Econometrics (LE) has concentrated heavily on strategic planning since the late spring when it became apparent that sharper than expected operating declines would invalidate the Soft Landing Scenario as a useful planning model. We no longer saw a slowdown, but a mild recession on-coming. That revision was the subject of our 2Q issue of Quarterly Perspectives, Lodging Econometrics� new strategic planning report.

As you might expect, the unimaginable events of September 11 have caused a second revision. The tragic events served to hyper-accelerate the mild recessionary trends previously confirmed by the release of August�s leading economic and lodging indicators. LE now foresees a deeper thrust in the short term followed by a slow, shallow recovery. (See Exhibit). The fall-off has been precipitous as businesses contracted further, consumer confidence weakened and the economy lost more of its self-assurance and swagger.

Travel's Crisis Condition

A crisis condition now exists in travel so serious that, for the first time ever, the entire airline industry nearly collapsed and required government generated support just to keep operating. The travel industry is so interdependent that the airlines� success or failure will play a precipitous role in lodging�s success or failure, too.

This Plan of Recovery should not be viewed as a one-time effort and then forgotten. It is possible, even probable, that the travel industry will experience periodic disruptions hereafter as our world has truly changed.  Element of this Recovery Plan may serve as a possible framework for an ongoing business model for lodging�s changed environment. The overall directional thrust wouldn�t change, but, in the future, objectives and strategies will constantly need refashioning to meet changing needs.

This suggested Plan of Recovery calls for a �bottom up� industry-wide offensive to immediately restore the public�s confidence concerning travel safety and security so that the country�s airlines and hotels can return to normal. As a byproduct, it will ensure investors and the financial community that the industry is doing everything possible to get back on track.

It calls for lodging executives at all levels - from the Home Office to Unit General Managers - to be visibly proactive, influencing government policy and spending, and developing initiatives and travel-related programs for civic and industry groups.  It calls for redirecting corporate and unit management teams and reallocating budgets. It calls for formulating partnerships with travel professionals in our communities, including competitors, and designing and merchandizing travel packages and, for now, programs with distinct patriotic themes that encourage a speedy return to travel.

It calls for opening our hotels and inviting in our regular customers, frequent travelers, group decision makers, future business prospects, and their families to be our guests and to enjoy our hospitality whenever we have available space during this recovery period.

Broad Initiatives

Support the Airline Industry 

A bounce-back in the airline industry is critical and the first priority. This plan is focused on the public�s perception of safety at the airport and in the skies. Security improvements need to be made quickly. The government should immediately take over ground security at major airports, at least for a while. 

The airlines can�t afford the long term improvements required. Encourage initiatives that call for increased use of sky marshal service and heightened cockpit security. If additional funding is required for airlines, support the program. Promote any steps that bolster the confidence of the traveling public.

Advocate Governmental Spending

Encourage additional, short-term fiscal stimuli that funnels dollars to where they will be spent quickly. Tax relief for citizens in lower tax brackets, increased unemployment benefits and some targeted educational programs could work. Stepping up governmental expenditures already in the pipeline is important. Financial commitments to reconstruct New York City, for the military buildup, for the airline industry and perhaps the insurance industry, too, will restore confidence and serve to spur the economy onward.

Encourage Further Monetary Action

Swift governmental action to lower interest rates, provide liquidity to our lending institutions and even assist international central banks has been excellent. There is lots of monetary assistance presently working its way through our economic system, all adequate for a mild recession. But perhaps even lower rates will be required, which may be more important than any fear of inflation in the longer term.

Favor Quick Governmental Responses

Bringing terrorists to justice is the overriding goal for the nation and the world. Nothing should override that goal. Planned campaigns are multi-faceted, involving military, diplomatic and financial strategies.  Consistent with working within our democratic traditions and making sure we are successful with our first strike, taking action sooner is better than later. If at all possible, suggest that the application of major military force would be better if concentrated in an early period of time so that our opponents� responses could be gauged and the disruption to our country determined. With early success, hopefully, later portions of the campaign could be quieter, less newsworthy and have a lesser impact on consumer and business confidence.

Speed Up Downsizing Strategies

In our own companies and operating units, another wave of downsizing and cost reduction programs may be needed to trim the scope of operations and seek alignment with likely business volumes. As hard as it is to say, everyone is best served by a speedy implementation of strategies, as opposed to any long, drawn-out process. We need to put consolidation strategies and bad news behind us as quickly as possible and refocus on positive programs that lead to recovery.

Increase Executive Visibility

The American Public has terrific resiliency. All of our institutions and industries are coming off the longest economic expansion in history and are in terrific shape. We are well positioned to address our short-term problems and push on to new successes.  America looks to its leaders for guidance, assurance and encouragement. Lodging executives at all levels should be highly visible, working to influence the governmental sector, and energizing trade associations and civic groups to promote travel. As leaders, we need to re-focus our companies and staff to promote travel, reassure and encourage present customers and attract new business. Everyone should be a salesperson. Others will draw confidence from us as we look beyond present problems and effectively implement new strategies that provide for our future prosperity.

Local Programs

Unit management teams possess unique talents and resources for leading a �bottom up� program nationwide to quickly restore confidence in travel, and to maintain that confidence as our campaign against terrorism evolves. They are in a terrific position to determine local needs and tailor appropriate initiatives.

It is a natural reaction during any serious economic downturn to reduce sales, marketing and rooms division staff, and to cut back advertising dollars. Hotel managers should not do it this time! Rather, over the next few months they should invest those valuable assets in becoming local community activists and reallocate resources in local initiatives to restore confidence in travel and ensure a rapid recovery and a successful future.

Develop New Travel Programs 

Local hotel executives, with their staff, public relations teams and budgets should energizetheir lodging associations, convention andlvisitors� bureaus, chambers of commerce, local airline sales representatives, and other tourism groups to package attractive, discounted travel promotions to attract scores of travelers by air, train and auto to each city. They should enlist television, radio and newspapers as promotional partners in the local travel recovery programs. When lodging executives with dedicated resources start the bandwagon rolling, other civic leaders will gladly follow. Imagine hundreds of local civic initiatives arising simultaneously throughout the country, led and seeded by the lodging industry. Patriotic �customer appreciation days� with bargain price programs promoted by each community would be like a �thousand points of light� touching the nation�s sense of patriotism and restoring the public�s confidence. Contagious enthusiasm and attractive programs would get the country moving again, put customers in airline seats and fill guestrooms.

Hit the Bricks and Meet the Customers

Triple the sales force. Don�t lay off excess desk and reservation staff. Turn them into doorknockers. Redirect the sales and catering staff, too. Put everybody on the road. Meet the customers, reservation makers and group decision makers. Create customer appreciation programs for them.  Write or e-mail to invite high volume, repeat customers to return with family members for a getaway weekend as the hotel�s guests on a space available basis. It�s also a perfect time to reacquaint travel agents, tour operators, corporate meeting decision-makers, and association executives with the hotels� facilities. Filling empty hotel rooms with ones� best customers and future prospects can restore confidence and travel activity quickly. It will not go unrewarded in better times.

Delight Your Frequent Travelers 

This is a prized constituency. Invite them and their families to be your guests by written correspondence and e-mail. Design special one-time appreciation programs with patriotic themes. Demonstrate how important they are! Match rosters with airlines and car rental companies. Design synergistic patriotic programs together.

Summary

Lodging executives at all levels have an unprecedented opportunity to help America move forward by assuming a leadership role to quickly take action and restore confidence in travel. We have leadership talent, proven promotional ideas, available staff, and budgets in place. Together with our travel partners in the airline, car rental and travel agency businesses, we know with precision who the frequent travelers are throughout the country.

The names of our customers are in our national and local sales offices, reservation departments and frequent traveler databases. We�re in the hospitality business.  We�re the nation�s hosts. These are the people who need to get on the road again for travel to bounce back quickly. Let�s invite them and their families to our hotels to get away from it all.

Americans will respond to a patriotic appeal to get on the road again. Travel bargains, coupled with customer appreciation hospitality, will work. And, in better times, customers won�t forget our graciousness and generosity.

It�s a terrific opportunity for lodging executives to rise to the forefront. To have our associations, hotel companies and unit management teams generate �bottom up� programs to get America back on the road
again would hasten the travel industry�s return to normalcy. Effective initiatives self-starting in each of America�s communities would surely be like a �thousand points of light� burning brightly for the world to see.  Our adversaries will sense the great resiliency of the American public. Terrorists cannot defeat us. They will always fail.

Quarterly Perspectives is published by Lodging Econometrics four times annually. Your comments and suggestions are always welcome. Please contact: