The 75 basis point cut in US interest rates yesterday was a dramatic signal of how the US economy is on the brink of a major recession.
Pessimists argued that either the Fed has been panicked into an overcooked loosening of monetary policy that will lead to a deeper recession later or else it is a too late reaction to an already crashing economy.
Even optimists, who view the intervention as welcome and timely, must now accept that economic risks are now very much on the downside. Hopes that the credit crunch was an isolated issue for the banking sector have clearly been confounded.
The fact that the Federal Reserve slashed its benchmark rate to 3.5% via the first unscheduled announcement since 2001 and that it is the biggest change in rates in one go for almost 26 years demonstrates the panic in the financial markets.
In the last week, your correspondent heard for the first time the CEO of a major hotel operator brag about how his company was well situated for the recession. The key point is that he was not putting a case for when or if a recession was coming but that in his view we are entering one. For him, from being a possibility last year, recession is now a reality.
Economists now view a major recession in the US as likely and that there will be a similar downturn in the UK. The outlook for continental Europe is less bleak and Asia Pacific is also viewed more positively.
This is, on the face of it, good news for global hotel operators. But in reality, no hotel group has a truly balanced hotel portfolio. Probably best situated of the majors is Accor, with the bulk of its profits generated in mainland Europe.
In any case, as the plunging share prices at the start of this week in Asia showed, no region is immune to a downturn in the US, still the world's biggest economy.
It is not just about geography. InterContinental's massive sell down of property leaves the bulk of its profits being generated from more stable fee incomes, as with Marriott.
The other majors have also all been exiting property, leaving them less cyclically exposed. Where leases have been retained they are increasingly turnover linked, meaning operators are significantly less geared to the downturn.
What is surprising is how stock market investors have not discriminated in favour of operators who own less property. Some of the quasi-property stocks such as Millennium & Copthorne have suffered less than fee-income focused InterContinental.
It seems unlikely that the hotel sector is heading for a meltdown on the scale seen in 2001 through to 2003. The economic downturn was amplified but the geopolitical shock of 9-11 and by the huge surge in room supply at the end of the 1990s.
There is every chance that the economic picture this time around will be worse but hotels, for a change, will not suffer disproportionately. There remains the prospect of at least two or three years of reasonable revpar growth, albeit that the rate of growth has slowed markedly.
In real terms, adjusting for retail price inflation, revpar has barely reached its previous peak in the US and the UK. In continental Europe, it is still significantly below. Analysts at Citigroup estimate that on average revpar in Europe is around 10% down on the 2000 peak, although the variance is large with Paris at about the same level of its peak but Frankfurt still off by 26%.
Historically, every recent hotel cycle has seen trading exceed its previous peak in real terms. It is assumed that this will be the case this time but it cannot be taken as a given.