The September 11th attack
Tourism's hot spots resorting to deep discounts

Advertiser Staff and News Services

As the global travel industry enters its third week of unprecedented cancellations, hotels, airlines and rental-car agencies are going to new extremes to bring back a scared public. Already, many of the steps go far beyond what was seen during the Gulf War: everything from SUV rentals for $39.99 a day to literally a $1 fare on National Airlines. One hotel near California's Yosemite Park is even offering to fill guests' gas tanks for the trip from San Francisco.

A lifeguard at the usually crowded Kuhio Beach says the number of beachgoers was "way down" last week. Advertiser library photo • Sept. 17, 2001

"The traveling public is in a traumatic condition," says Ray Neidl, an analyst at ABN-AMRO Securities.

Indeed, airlines, which were already experiencing a slowdown before the most recent events, could lose as much as $10 billion by some estimates, while hotel-room revenue are declining at a rate of about $45 million a day.

Cruise lines? Many say bookings have been half their normal levels.

Still, the impact hasn't been felt equally across the country: Some regions and travel sectors appear to be carrying on better than others. In the Northeast, for example, weekenders and day-trippers are flocking to quiet local escapes like wineries and orchards, while hotels in California have been able to keep prices steady. Destinations that rely on air travel, like Hawai'i, will be hit harder. Below, a region-by-region look at the industry:

Florida

Of all the U.S. tourism hot spots, Florida, along with Hawai'i, could be one of the most affected. Hotels already were feeling a 2.9 percent occupancy drop from last year, but that's nothing compared to the falloff in the past weeks: The Greater Fort Lauderdale area alone says the region has lost about $50 million of business, including a conference of 2,000, while several tourism agencies have suspended advertising in the United States and Canada. Theme parks, including Disney World, say business is down but won't say how much.

In Miami, where nearly all hotel guests arrive by plane, hotels say they've hit a new low: They're running only about 30 percent full, less than half their usual occupancy level this time of year. "We're used to dealing with situations that have a beginning and an end — a hurricane comes and leaves," says Bill Talbert, president of the Greater Miami Convention & Visitors Bureau. "Here, we're in it for the long haul."

The result: heavy discounts for travelers.

The tony Loews Miami Beach Hotel, where occupancy is in the teens from roughly 80 percent just 10 days ago, will soon unveil a $99-a-night special, about half its normal rate, through the end of October. On the higher end, the Ocean Point Resort & Club, which had about 100 cancellations last week, is now offering suites for $169 instead of its $480-a-night rate.

Colorado/Utah

This region makes much of its tourism money from skiers (19 percent for Colorado, 25 percent for Utah), so officials are hoping most fliers' fears will be dispelled by the time the first flakes start to fall. "Skiers are fairly resilient," says Kip Pitou, president of Ski Utah, who points out that tourism dropped just 1 percent during the Gulf War.

But hotels aren't taking any chances. Already, Destination Hotels & Resorts, which manages a group of ski resorts in places like Aspen and Vail, is slashing rates as much as 65 percent through December on its Web site. Rooms at Stonebridge Inn in Snowmass, Colo., are going for $99. Meanwhile, the Utah Travel Council is pushing forward with a rebate plan for hotel guests, originally intended to dispel fears of overcrowded slopes, with about 90 percent of the state's hotels participating.

New England

Weekenders and day-trippers may be this region's saving grace: Already, traumatized New Yorkers and their New Jersey neighbors have been flocking upstate for farm markets and leaf-peeping. The Warwick Valley Winery, which offers wine tasting, live music and apple picking, saw a 20 percent jump in business last weekend, while nearby Pennings Orchard and Farm Market saw a similar rise in apple pickers, a significant increase so early in the season.

Travelers who rent cars for these quick trips shouldn't have a problem, analysts say. Though rental companies had their cars scattered across the country by stranded air travelers, most say they've regained their fleets and are offering discounts to get them on the road again. Still, hotels are trying to attract visitors who'll stay longer than just a night or two.

California

So far, many of the state's hotels have held off on discounting. "We're not lowering rates at all," says Steve Pinetti, of Kimpton Group, a boutique hotel chain based in San Francisco, even though he concedes occupancy levels have dropped this month.

Indeed, Sharon and Dale Hilpert of San Francisco found that prices at the resorts they wanted to stay at in Napa Valley and Big Sur were still as high as ever — about $500 a night. The couple, who had planned to travel to Hawai'i but canceled, had assumed they would find some deals closer to home. "My sense is this affected the East Coast very differently," says Hilpert, who moved to San Francisco from New York this spring. "It's not insensitivity. It's just a big country."

Many California tourism spots say they haven't seen a dramatic drop in visitors. "I think at this point in time it's almost wait and see," says a spokesman for the California Travel and Tourism Commission.

Still, there also is anecdotal evidence to suggest some affects are being felt.

"Tourism in California has been hurt generally; there's been a dramatic drop in the number of visitors from Asia, and that trend is likely continue for months to come," Keitaro Matsuda, economist with Union Bank of California, said in an economists' conference call last week.

Caribbean

Talk about a double whammy: Caribbean hotels had already been offering large discounts for months because of a decline in demand. Now, with 100 percent of their guests coming in by air or boat, and with financially battered airlines unlikely to reduce prices any time soon, business could be even thinner. Already, Gogo Worldwide Vacations, a major wholesaler to the Caribbean, reports "substantial cancellations" from New York and surrounding areas, though bookings from other states are still holding.

Winter is the region's prime season, so travel agents say some hotels are trying to put restrictions on deals. For now, though, the Westin Rio Mar Beach in Puerto Rico has little choice but to restart a 33 percent sale on rooms that originally ended Aug. 31. And in Aruba, the Aruba Sonesta Beach is seeking to combat a wave of cancellations by cutting room rates 20 percent to $129 on rooms that normally go for as much as $325. "It's to motivate people and tell them its OK to travel," says a hotel spokeswoman.

Cruise lines, which just saw their bookings halved, have decided to make a push for more business.

Las Vegas

This city has been hit hard. In the week after the attacks, little more than half of the 75,000 rooms on the Strip were empty and hotels were forced to slash room rates. Normally, weekend visitors fill about 94 percent of the city's 126,083 hotel rooms.

"The trouble with having a one-industry town is that if that industry is in trouble, everything is in trouble," said Keith Schwer, director of UNLV's Center for Business and Economic Research.

Dozens of companies have laid off workers: Casino operator Mandalay Resort Group announced it was cutting 4,500 jobs, about 15 percent of its work force in Nevada; MGM Mirage has eliminated about 3,000 of its Las Vegas work force's 38,000 jobs, and more cuts are expected. Park Place Entertainment has cut at least 1,500 jobs at Paris, Bally's, Flamingo and Las Vegas Hilton.

The Aladdin, The Venetian, Stardust, Riviera and Binion's Horseshoe also have eliminated jobs, placing the citywide layoff figure at 12,000 to 15,000, although no solid number is available.

Harrah's Entertainment Inc., the No. 3 U.S. casino company, said it closed restaurants at its Las Vegas properties and laid off 160 workers. Sales at the company's Western region properties, including Harrah's Las Vegas and the Rio in Las Vegas, fell 39 percent from a year earlier in the five days after this month's terrorist attacks and 7 percent in the next five day period, ending Sept. 22, the company said.

Casino companies also have announced project delays: Mandalay Resort Group, owner of the Luxor and Circus Circus casinos, will delay the opening of its planned $235 million convention center to 2003 instead of the summer of 2002. Las Vegas Sands Inc. said it's postponing a $1.2 billion expansion at the Venetian casino in Las Vegas to conserve cash. And Park Place Entertainment Corp., the largest casino company, said it's pushing back completion of a $475 million hotel tower at Caesars Las Vegas.

The No. 1 convention market has had more than 240 meetings canceled since the attacks, a loss of more than 54,000 customers to the city's hotels and casinos, the Las Vegas Convention and Visitors Authority has said. The decline in business and leisure travel cost about $3 million a day in lost revenue to Mandalay and other owners of Las Vegas Strip casinos.

But city officials say there are signs of an uptick in tourism: 75 percent of the destination's available 125,000 rooms were filled last weekend, and several large conventions next month have reconfirmed their plans to continue.

"We expect our visitor numbers to continue to increase as time goes on," said Rossi Ralenkotter, vice president/marketing for the LVCVA. "People need leisure time, especially when day-to-day life becomes stressful. We just want everyone to know that when they're ready to get away again, Las Vegas will be here."