Sure, there are fairly ironclad indicators that the U.S. economy is in distress or flying high: GDP contraction or expansion, employment, consumer spending, the list goes on.
In the hotel industry, we look of course at how people are prioritizing spend on travel over other goods and services.
But for me personally, the indicator I look at for economic health or distress is always food. Did that trip to the grocery store cost a little more this week? How do I feel about dinner and drinks out with friends this weekend, and can we splash out or do we need to dial it back?
As someone told me back when I started covering the hotel industry, "let the shrimp tell the story." As in, when the economy's going well, the shrimp abounds. When it's not, we see cheese on the buffet instead of crustaceans. Let's leave Red Lobster out of it for now; the shrimp are just victims there.
Right now, there's a lot of chatter around things such as grocery and restaurant prices, and who's eating what and where.
Earlier this week, we referenced the Wall Street Journal article calling restaurants "the hottest corner of retail real estate." According to the article, total restaurant sales have never been higher, and Americans are dining out more everywhere, from fast-casual chains to fine-dining restaurants.
At the same time, some fast-casual chains are dropping prices with much advertising fanfare: Panera lowered prices and upped portions, and this week Starbucks said it is getting into the lower-priced combo game.
Grocery retailers such as Aldi, Target and Walmart have cut prices this year, in hopes to "turn the dial slightly down on profit margins in the hope of selling a higher volume of stuff."
These changes aren't all permanent, at least not yet, because why should they be? Grocers and restaurants revenue-manage just like hoteliers do, and for now it looks like they're sacrificing rate for occupancy, at least over the short term.
But those fine-dining restaurants continue to go gangbusters. People who can afford it want their night out, with a couple cocktails to boot.
Kind of sounds like the hotel industry, doesn't it? Travelers who can afford it absolutely want those experiences, the value for what they're paying. But consumers at lower income levels are questioning whether travel can happen and how they'll make it work.
At this point in the economic cycle is when we watch to see whether hoteliers, like grocers and fast-food operators, cut rates to gain demand, where and for how long.
The silver lining for hotels and restaurants, it seems, is that "the upper end of the market continues to just chug along," as CoStar's Jan Freitag put it.
Where I think the hotel industry can glean some insight from these current restaurant and grocery trends is to remember that there's valuable experience to be had at many levels. Sure, the let's-go-out-to-Morton's-every-Saturday crowd is going to keep doing that. For us in the middle of the pack, the pandemic reminded us that even though it can be expensive, going out for dinner and a drink with friends or family is absolutely an experience we won't sacrifice. Will I pick up groceries at Aldi instead of Whole Foods this week to make that work? Probably.
How do you feel about food as an economic indicator? Email me, or find me on Twitter or LinkedIn.
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