Infotheque Network

Interesting reading, in particular when considering the blown out of proportion "lifestyle" area around Loscabos. We all see how the recession did affect that area and the people living and working there. (Yeah, the editor does know: we just see things NOT the right way and without having a vision..... sure...!!) Luxury hotels with $1,000-a-night room rates and extravagant resorts may face a tougher recovery than the rest of the industry. "The most over-the-top excesses will probably be a long time -- if ever-- coming back," Marriott President Arne Sorenson told the Reuters Travel and Leisure Summit. He drew a distinction between these hotels and the typical Ritz-Carlton luxury hotels the company operates. Marriott's other brands include its namesake properties and Courtyards. Sorenson added that some projects in the Caribbean, which tend to be smaller and partly rely on residences, "may never come back" because they rely on the kind of lavish spending that has gone out of vogue with travelers. "They require really that conspicuous consumption to support their entire business model," Sorenson told reporters in a telephone interview. Of all hotels, luxury properties were the hardest hit last year. While rates sank nearly 9 percent for the U.S. hotel industry, luxury hotels saw their rates tumble more than 16 percent, according to PricewaterhouseCoopers.
Many hotels across the spectrum have buckled under their debt loads in this downturn, as lower room rates constrain cash flow used to service these payments. The Renaissance Mayflower Hotel indicated last year that it would no longer be able to meet debt service, Fitch Ratings said last month.
Ritz-Carlton Hotel Co, a division of Marriott, will close its Lake Las Vegas property this year. Some distressed properties have bristled against standards set by companies like Marriott. Sorenson said the company is working with some hotels to manage their payments, and has extended the deadline for hotels to put flat-screen television sets in rooms.
"We've also got some one-off owners who just don't have two nickels to rub together," Sorenson said. "If it goes too long or if it is too severe, that is a place where the response is really to pull the flag." Chief Financial Officer Carl Berquist and Sorenson said typically 5,000 rooms leave the Marriott system each year, but this year a few thousand more rooms could be shown the door.
These properties would largely fall in the limited-service category in tertiary markets. In the event that a hotel goes into foreclosure, Marriott has "non-disturbance agreements" on many hotels, which prevents that hotel from leaving its brand, Berquist said.
Widespread distress in the hotel industry, lower rates and tough economic conditions do not mean all luxury hotels will go belly-up, Sorenson said. Some of these hotels will be able to restructure their debt with their lenders. "There's a whole bunch of hotels that are in established destinations, dealing with meaningfully lower rates," Sorenson said. "Over the next number of years (these hotels) are going to see their owners work with their lenders."
Interesting reading for one living at Baja Sur with all of it's Baja luxury.... Read that and the next post and then go back to our post last year about the 'W" of double-dip and build yourself a opinion....

Travelocity’s most recent poll shows a dramatic increase in travel intentions, indicating traveler confidence is on the rise. Travelocity's second Traveler Confidence Report reveals that nearly half of respondents plan to increase their travel in 2010 as compared to 2009. The Traveler Confidence Report gauges travelers’ plans and attitudes now as compared to six months prior and one year prior. Significantly more respondents (49 percent) plan to increase their travel in the year ahead, compared to 21 percent six months ago and just 10 percent in 2009. Another 44 percent plan to travel "about the same" as compared to last year. The number of travelers planning to decrease travel is down significantly to 7 percent, compared with 34 percent one year ago and 24 percent six months ago.
When asked how lower prices would impact travel plans, 33 percent said they would stay in a higher star-rated hotel; 30 percent said they would take a trip they had not expected to take; and 18 percent said they would extend their stay. The majority of respondents (56 percent) did not have a predetermined travel budget for 2010. Of those with a predetermined travel budget, 34 percent plan to increase that budget. An overwhelming 76 percent of respondents are at least somewhat likely to book a vacation package as a way to save money.
The findings are based on the intentions of more than 2,000 North Americans surveyed by Travelocity and even more let's hope that some of them "good" percent's think of Baja and all the great opportunities here....

According to a analysis published today at Reuters will luxury goods providers (high end market) have a dim outlook for the near future and need to brace themselves for at least two more years of pain, with big-ticket items suffering most. Luxury goods executives told the Reuters Global Luxury Summit this week they were doing their best to preserve cash and cut costs and cutting advertising. It will probably take longer than first thought to reverse negative trends as consumers feel uncomfortable spending high amounts of money while thousands are losing their jobs and the economic future remains uncertain! "I think the crisis is very deep," said Lamborghini Chief Executive Stephan Winkelmann, adding the sports car maker had cut production by 30 percent this year. "A lot of companies are going out of business," he said. Global luxury goods sales are set to drop by at least 10 percent this year and remain sluggish in 2010, industry experts and analysts predict. Consultants Bain & Co do not see a full recovery before 2012.

The longer term prospects of the luxury industry remain attractive as the number of affluent buyers is set to rise further and several regions such as central Asia, Siberia, Latin America and India have not yet been fully tapped. But this is unlikely to be enough to make up for the pain in established markets, especially as the slowdown is forcing luxury groups to hold back investments in the newer frontiers. "Emerging markets growth is likely to contribute the bulk of future luxury goods market growth but it is not likely to offset the impact of lower macro-economic growth in the next 5-10 years and bring us back to luxury goods market growth of the past 5-10 years," Bernstein Research said in a note.

The global economic crisis could change the entire landscape of the luxury goods industry. Bill McComb says “the world has changed and it’s not going back to business as usual.” Watch the video below and listen to what McComb described as the “new normal” .

What will be the impact of this general drift be on Baja California?? Baja Infotheque Network just likes to remind at the many so called "high-end" developments all along the Baja peninsula, many of them on hold or progressing very slow since no investors are willing to spend money right now and the developers them self don't have the means to finish the projects out of their own pockets. Is that all so bad?? We don't think so - it's gonna be more like a natural cleansing, the good ones - preparing themselves since the bubble-burst last fall for what is now is emerging as in the report stated by analysts. Analysts that have no interest on certain areas on the globe or certain market to be "bad" or "good" but plain and simple work on their analysis by facts given