However, not all good things last forever and soon this
pressure for growth resulted in overcapacity (particularly
in North America), brand and product proliferation and
declining occupancies. This was accompanied by a global
level of inflation that brought the cost of building a new
hotel room to new heights. The inability to maintain growth
and the increasing pressure from the capital-market
community forced hospitality firms to sell off assets and
in return take back management contracts to manage these
assets. Firms shifted from asset holders to asset
managers.
While all this was developing throughout the 1980s, firms
were still betting their fortunes on their ability to provide
a better product and service to the customer. The belief
was that they could still attract customers through these
efforts and better marketing capabilities. This, however,
has not been the answer to the emerging problems of the
1990s. This is because, during this period, three important
events were taking shape which are likely to impact on