IN the depths of the recession, a cartoon made the rounds in the executive offices of the Ritz-Carlton hotel chain. “It showed a guy trying to change the name on the sign above his hotel from Ritz to Fritz,” said Simon Cooper, the president of Ritz-Carlton, which is the top luxury brand of Marriott International.

While the recession cut deeply into business and leisure travel at all hotels, luxury hotels were hit the hardest. It didn’t help the Ritz that its name was a symbol of the rich life.

Now, however, that segment is reporting the strongest recovery. For the week that ended May 1, the luxury hotel niche reported the sharpest increases in both occupancy and revenue per available room of any segment in the domestic hotel industry, according to Smith Travel Research, the hotel financial analysis firm.

“The recovery is stronger in luxury than in any other segment of the hotel business,” Mr. Cooper said. “This time last year we were taking the toughest hit, primarily because of the cancellations of groups after A.I.G. and all the media attention that created.” Everybody, he added, “was being very circumspect about how they spent their money, and where.”

The so-called A.I.G. effect crushed many areas of travel spending after reports that the insurance giant American International Group ran up a bill of about $440,000 on an incentives retreat in October 2008 at the St. Regis Monarch Beach, a Southern California resort hotel, shortly after the company accepted an $85 billion federal bailout. The bill for the retreat included $23,000 for spa treatments and $16,000 for the presidential suite.

The only other segment of business travel that was hit as hard as luxury hotels during the downturn was the private jet industry, where sales plummeted after a period of record profits. The luxury hotel business went through a similar trajectory in recent years. The business aviation industry has also begun to recover in recent months.

Read More

Back to top