The survival of most luxury hotels has always been driven by corporate business travel. When the economy was good hotels were able to sustain from corporate bookings, meetings, and conferences. This was the main reason why PR campaigns targeting luxury business travel thrived.

However, things are changing for the luxury hotel industry fast. According to the New York Times, since mid-September, almost in parallel with the stock market turmoil, demand for fancy hotel rooms has plummeted. Patrick Ford, the president of Lodging Econometrics, said that luxury hotel room revenue rates “slowed in mid-September and really ratcheted downward during October.”

Revenue per available room, the standard measure of performance, dropped 14 percent at upscale and luxury hotels in the week ending Oct. 18 over the comparable week last year, according to Smith Travel Research. For hotels in general, the decline was about 8 percent.

Not just a problem for the luxury hotel industry but also a concern of midprice hotels as well. The declining effects started to impact midprice hotels this past summer. However, luxury brands are faced with a major PR problem because company employees receive bad press when they stay in luxury hotels.

“It’s a budgetary issue,” Mr. Hanson said, “but a more fundamental issue is, how does it look if you’re laying off 10 percent of your work force and you have people staying at $500-a-night or $1,000-a-night hotels?”

According to Bjorn Hanson, an associate professor at the Tisch Center for Hospitality, Tourism and Sports Management at New York University financial services and other companies have quietly advised employees against using luxury hotels. Hanson stresses that these companies are telling employees, “Don’t stay in Four Seasons, Ritz-Carltons, Mandarin Orientals.”

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