"Even before Sept. 11 there was evidence of a downturn in the upper end of the market," said Melvin Gold of Pannell Kerr Forster. New figures out from Andersen Consulting show that occupancy levels in London hotels fell 22.5 percent in October.
But, worryingly, the signs are that the problems at the top end of the market are starting to filter down to other sectors which are not at risk from the threat of terrorism. Analysts at Merrill Lynch are warning that this year will be the music industry's worst ever. The bank predicts that global music sales will fall more than 10 percent this year, a bigger drop than during the recession of the early 1980s.
The UK music market, which has hitherto remained immune from the slowdown, now seems to be showing signs that it, too, is feeling the pinch. According to soon to be released figures from the British Phonographic Industry, music sales fell 4.2 percent in the third quarter of this year.
And even the UK housing market is showing signs of a slowdown. House prices fell in October for the first time since February, according to Nationwide. The building society said that the price of the average home fell 0.5 percent to US$130,835.
assigning blame
Undoubtedly some companies and sectors are suffering from what they hope will be a short-term dip in consumer spending brought on specifically by Sept. 11. Last week, Rank Group, for example, warned that full year profits at its Hard Rock chain of restaurants would be down by 15 percent, simply because tourists were staying away.
But many other firms cannot pin the blame on terrorism. Clothing giant Gap last week unveiled its first loss in more than 10 years.
Like-for-like sales in its stores were down 17 percent in the three months to September, suggesting the economy was already hurting consumers long before the attacks.
Many experts, however, believe it will be a few more months before a true picture emerges.
"The big question is how are people going to react next year? You can picture a scenario where you have a good Christmas and January but once you go into February there is more uncertainty. People who have lost their jobs will realize they shouldn't spend their pay-offs and they'll batten down the hatches," said Richard Boys-Stones, a partner at PricewaterhouseCoopers.
The consumer may be king. But don't bank on him being a savior.
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