What do Corporate Housing, Discount Retailers and “Sin” Industries Have in Common? They Consistently Hold Their Ground, Despite Economic Conditions
Posted on 07. Jan, 2010 by Kat Schneider Fotheringham in Blog, Business Travel, Uncategorized, executive accommodations, international business travel
Historically, various industries typically hold their own ground — and sometimes even flourish — during economic downturns and recessions. Some of these businesses likely come to mind right away, whereas others neither you might not typically consider… nor do they get much media attention. Corporate Housing is a perfect example; it is not a very hyped or newsworthy market segment that tends to make headlines during a tumultuous economy. However, this niche industry holds steady and high occupancy rates even when other industries are hurting.
So… why do particular industries do so well when others struggle to make ends meet and commonly collapse? Here’s a quick look at some of the reasons:
Sin Industries
In bad times, the bad do well. Although it seems a little counterintuitive, people are loyal patrons to those products and services that may be viewed as more sinful, especially during a recession. People will pass on an iPhone or Blackberry upgrade, but several nightly glasses of wine, a pack of cigarettes, and/or chocolate indulgences name but a few of the small expenditures that those tight on cash will NOT typically skimp on.
The most prosperous businesses in this segment are purveyors of small pleasures that are found on the shelves of convenience stores and gas stations.
Corporate Housing
Here’s an interesting profit niche for rental property owners that doesn’t get a lot of media attention: Corporate Housing.
Providers of Corporate Housing target to lease out their furnished (often executive) rental unit or home to relocated employees, consultants on business travel, or families in between homes. It is reported that this real estate segment continues to hold their own during rigorous economic times; 8.5 times out of 10 they offer more revenue for investors than long-term rentals.
According to a corporate housing industry group, last year corporate housing rentals stood strong with over an 88 percent occupancy rate. To give you a frame of reference, other typical lodging options and hotels barely broke 70 percent during this same time period in most markets. The net-net is that one can rent out their home, condo, or apartment to traveling domestic and/or international business travelers at much higher rates for shorter durations. In fact, feel free to post any upcoming properties you are considering renting on our site, and/or peruse upcoming availability in the U.S. and overseas on TCHNetwork.com.
Discount Retailers
It is pretty obvious that when people are on restrained budgets, they turn to the stores that offer the most for the least. Your initial reaction might be that discount retailers like WalMart or Target do well at any time; not always the case. Walmart often suffers in good times because those who have more generous budgets buy higher-quality goods via other outlets. To remain competitive when the economy is good, stores like Walmart are forced to upgrade their product lines and change the focus of their business from thrift… to quality. Consequently, their profits suffer from either lost sales or less profit margin.
In hard times, however, these retailers do well by reverting back to the less expensive core products and are able to provide cheaper goods to consumers. People may not like discount retailers, but in a recession most people end up shopping there.
The Steady Businesses
As always, pharmaceuticals, healthcare companies, tax service providers, funeral homes, and waste disposal companies typically don’t feel the pain other companies suffer through during economic turmoil. Obviously, people still get sick, we all have to pay taxes, sadly people pass on, and we continue to generate lots of trash. Sometimes the most boring businesses offer the most consistent returns.
