The Future of hotel and restaurant businesses

Question

We are entering a serious inflationary depression over the next few years as the economy is on the verge of collapsing. This means the price of food is going to be going up. The price of oil is going is also going up and this means everything goes up in price! Are you eating out less often? Are you traveling less often and saving money on not using airlines, hotel rooms, car rentals? What are your predictions on the future of this industry?

Answer 1

While it's a difficult short run market, these business fluctuations are probably good for the long run viability of the hotel and restaurant industries.

In particular, down periods get rid of less productive and profitable organizations who cannot compete. It's an ecological argument, but environment shocks (such as recession) reduce the available resources within an industry. This leads to a search for new competitive strategies and tactics (firm-level variation) that changes the way firms do business. These varied-form firms are able to compete better in the tough market, hence the others are selected out, leaving only the best companies (ecological retention).

Of course, this implies that consumer prices will also go up since there is less competition. The resultant increase in prices will continue until the next expansion cycle of the economy, where new firms will be attracted to above-average rents (i.e., profits), introducing new competition and reducing consumer prices.

One thing to consider is that many restaurants actually compete reasonably well against the home production of food. For example, they exhibit economies of scope and scale against home producers that allow them to offer food at lower costs than producing (cooking) on your own. Firms that can compete like this will do just fine throughout the recessionary period. In addition, many citizens are being forced to work multiple jobs to earn extra income, meaning there will be less time for the domestic production. Accordingly, firms on the low-cost end of the restaurant industry should be okay throughout this period.

Answer 2

Yes. I hardly ever eat out now because i simply cannot afford it. I also can't afford to travel, but when I do, I split the room with many other people so that It's cheap. We bring sleeping bags and sleep on the floor of the hotel room. It sucks! I hate this.

Answer 3

yes I am eating out less often because my fiance was laid off and I'm supporting our family single handedly. But you know eating in can't last forever because I get bored and tired of cooking sometimes....I think it's probably like that for everyone, even if there is a slight downturn of people eating out recently I think the industry is going to be just fine:)

Answer 4

Loving it. I will open a new restaurant soon.

Answer 5

Nice question!

I am traveling less, most by car rather than by plane. I prefer staying at some friends place rather than hotels (whenever possible) to save money. I definitely buy less food and eat more at home, but I still dine out a few times a week.

I believe hotels and restaurants are safe. Hotels especially since they do not tend to randomly increase the cost of stay and the service is always great. With respect to restaurants however, it all depends on the quality of their food, service and pricing. Most restaurants I know are actually doing well since they now offer smaller and cheaper meals.

Answer 6

I think Starbucks closing so many stores, Bennigans going out of business, hotels offering gas cards and free night's stays with a 3 night visit and other incentives being offered by the travel industry is a barometer of the health of travel industry and the vacationing consumer.  The mayor of our city, San Diego, came out last week encouraging residents to "stay-cation" and spend money on area attractions rather than leaving the county to go elsewhere.  Our local attractions are financially suffering and offering substantial discounts to bring in attendees.  Most people I know are not going far away from home for get aways, eating in more often and entertaining friends and relatives at home rather than going out.  I only eat out if there is a coupon being offered for a free meal or substantial discount.  I think people are struggling to pay for increased gas, electricity, water, and food prices so there is little left for discretionary items.  Do I think it will get worse for the travel industry, yes I do.  I just don't think we have hit bottom yet, particularly in my market and SoCal is a travel destination.

Answer 7

i am not sure i kind of feel that many americans feel that they work hard and they need a vacation no matter what.  i do feel that the hotel and restaurant businesses will be hit fairly hard if they are not well established.  

Personally i am saving more travelling alot less and cooking at home more.  

i do think if a new restuarant is developed that they should go green with more local foods etc... i think that will draw more people to the spot

Answer 8

thats only true in america i live in france. and we go out all the time. sorry but the americans are the only ones that are suffering with the economy

Answer 9

Oh what complete ignorance!

Stop spouting talking points and go out and learn something.

We are NOT entering anything near what you claim.

The future of the hotel and restaurant business is fine. However, certain niche franchises subject to fads (e.g., Starbucks) will not do as well.