Business Report: Travel Industry Struggles With The Coronavirus Effect
Q: Wall Street was the big story again this week. A lot of volitality as the coronavirus affects the economy. Let's focus on the travel industry. What's the outlook?
A: United Airlines and JetBlue this week announced reductions in their domestic and international travel schedule. United is cutting back 10% on domestic flights and 20% of international flights. They're looking at a hiring freeze. They're looking at a freeze on management salary increases. JetBlue is doing the same thing. JetBlue is cutting their schedule back about 5% because these airlines don't know what's going to happen to demand.
Q: The fed tried to stabilize the markets by cutting the benchmark interest rate. That affects mortgages. What do homeowners, or people looking to buy, need to know?
A: One of the positive side effects is that the Fed reducing interest rates by half a point also reduces the mortgage rate to the lowest since November of 2012. The real value here is on refinancing or remodeling. 45 million consumers that own their home have over $6.2 trillion in value that they can unlock from their from their homes and refinance. The one little interesting tidbit in this whole thing is that because of the rates, mortgage applications have increased 10% in the last week, which is huge. Banks are needing to hire loan processors.
Q: Finally, let's get your reaction to Measure C. It appears to be just short of passing. What does this mean for the convention center?
A: This is the first time that we would raise hotel taxes since 1994. There have been four measures that have failed since then. Here's the issue: We have Comic-Con through 2024. Comic-Con was banking on this vote because when the renewal comes in a couple of years, the pressure for them to be in one location is going to be huge. So Los Angeles, Anaheim and a number of cities that we have off up to now on the promise that we may expand the convention center.
The last thing is that while we wait for the votes to be counted, the State Supreme Court a couple of years ago said that citizen initiatives need a 50% threshold. That was kind of muddied when a Fresno Superior Court ruled that for a sales tax, which this is, needed two-thirds. So our last recourse could be that the city and can go to court and see if we can change the rules.