Fourth , New York City , San Francisco , and Seattle urban neighborhoods experienced by far the most out-migration . These cities are described as outliers and largely responsible for the pandemic relocation phenomenon labeled an ‘ exodus .’ The idea that recent trends were amplified during the pandemic resonates .
Bottom lines , finally
The findings from the empirical studies just presented and one ’ s own intuition leads to a set of straightforward conclusions about near-term shifts in hotel markets in the wake of the pandemic . New York , San Francisco , and possibly some other high cost-of-living large cities that experienced upticks in crime and civil unrest will be discounted . Second and third tier cites will receive a lift . Luxury , destination resorts , mid-price , extended-stay , and lower price hotels will do well with continued strengths in leisure business . However , upscale , urban , upper-upscale hotels that depend heavily on business travelers and groups can be expected to underperform .
What about the LONG-TERM SHIFTS ? Recall , my recommendation to rely on theory when confronted with never-before-encountered situations .
If Tiebout was still theorizing he would lecture us on the economic rationality of households and businesses moving to greener pastures to avoid persistent imbalances in taxes paid and services received . Central cities finances will likely necessitate the continuation of these imbalances well into the future .
Muth would lecture us on the transportation cost reductions from advances in videoconferencing technology ( maybe the hologram cometh ?) and how those reductions liberate households from locating centrally . Technological advances are seldom reversed ( we will see about crypto ). The involuntary work-at-home experiment proved the proposition . Not reported on here is a stream of research that shows work-at-home is no less productive than in-office work , innovations notwithstanding .
All this yields a conclusion that long-run future economic activity and hotel business opportunity will materialize in outlying areas of major MSAs , medium and small cities , and tax and cost-of-living friendly states . Many urban centers and high tax states run counter to the trend . One of famed Wall Streeter Marty Zweig ’ s rules for investing is ‘ the trend is your friend .’
Sources :
1 Tiebout , C . ( 1956 ), ‘ A Pure Theory of Local Expenditures ’, Journal of Political Economy , 64 ( 5 ): 416 – 424 .
2 Muth , R . ( 1969 ) Cities and Housing ; the Spatial Pattern of Urban Residential Land Use . University of Chicago Press .
3 Glaeser . E . L ., ( 1999 ) ‘ Learning in Cities ,’ Journal of Urban Economics 46 ( 2 ): 254-277 .
4 Danstadli , J . M . et . al ., 2012 , “ Video Conferencing as a Mode of Communication : A Comparative Study of the
Use of Videoconferencing and Face-to-Face Meetings ,” Journal of Business and Telecommunications 26 ( 1 ), 65-91 .
5 A table listing these studies and some specific findings is available by email request ( Jack . Corgel @ CBRE . com ).
60 hotelsmag . com July / August 2021 info @ hotelsmag . com