Given the fallout from Sept. 11, investors were unsurprised when the Spokane-headquartered hotel company attributed the decline "primarily to a decrease in hotel revenue of 11.6%." In its Nov. 14 announcement, WestCoast said, "the terrorist attacks had an impact on the ability and motivation of our customers to travel and utilize our hotels and restaurants." And it is clear the company expects impacts may continue.
In big, bold letters, a heading in the announcement read, "We may face interruption of production and services due to increased security measures in response to terrorism." WestCoast further stated that delays in services such as transportation, mail or financial "could have a material adverse effect on our business, results of operations and financial conditions."
Looking forward, Chris Burdett, a hotel specialist with the Seattle office of Colliers International, tells GlobeSt.com he expects financial reports from hoteliers to be dreary for a while, but he believes an end to the gray skies lies in the foreseeable future. Just as experts are predicting a relatively short-lived recession for the overall economy, Burdett sees something similar for the hotel sector. "It's just going to take some time," he says.
He is, however, quick to include the caveat that any recovery is dependent on the economy continuing to head down the road on which it seems tracked. There are many unknowns still lurking in the bushes - like the potential for negative incidents arising from the war.
"Overall, everybody's going to have a difficult fourth quarter," says Burdett, noting that winter is typically slow for the industry. "But sometime in the first quarter or early second quarter we may begin to see some recovery," he counters.
In the Washington hotel economy, Burdett is already seeing some areas beginning to bounce back to what would be considered normal pre-9/11 levels for this time of year. Recovering most quickly are the secondary and tertiary markets. "Airport and larger group facilities, such as in downtown Portland and Seattle," says Burdett, "are still struggling to some degree."
It may also be a while before hotel investors to get back into the swing of things. "There is still a lot of concern in the market," Burdett explains. "It's the wait-and-see mentality. There are buyers out there, but they are concerned about the economy and the war. There's a lot of trepidation about getting into the market."
The good news according to Burdett is, "We aren't seeing lenders or owners panicking. Everyone knows this is a cyclical industry, and this is nothing new in terms of an economic turndown."
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