economic

Running head : ECONOMICS

Economics

MACROBUTTON AcceptAllChangesShown "[Click here and type your name]

MACROBUTTON AcceptAllChangesShown "[Click here and type your institution 's name]

EXECUTIVE SUMMARY

Economists explain that we are in a consumer-led recession , which appears to be reinforcing the contraction of credit and reduced business investment and , therefore , leading to a deeper and longer recession . GDP growth is expected to slow down to a 2 .2 percent annual rate in 2008 but the Consumer Price Index (CPI ) forecast has been adjusted upward to a 2 .6 percent annual rate

p With the decline in GDP growth and a corresponding inflationary pressure , the hotel industry is definitely heading towards a downturn Since overall income is going down and prices pushing upwards , the inevitable consequence would certainly be a reduction in consumption which is manifested by a decline in hotel occupancy

As a result of declining hotel occupancy , the hotel industry will experience a corresponding decline in profit margin thereby affecting its viability . This explains why based on reports , stock prices of major hotel chains have been falling

This could have serious repercussions in the overall medium term competitiveness of the hotel industry since falling hotel stock prices could mean a significant reduction in investments and hotel expansion . A shrinking investment in the hotel industry would certainly spell its downturn in these economically challenging times

The question now is how will hoteliers respond to such challenge ? Will they respond by raising or lowering hotel rates ? The seemingly constant labor surplus in the hotel...