wigstheone
Jun 3, 02, 5:59 am
Despite earlier signs of a recovery this year, the hotel industry is not bouncing back from its recent slump as quickly as expected, according to a new analysis. Still, hotel profits are expected to rise from last year due to cost-cutting.
Revenue per available room, a standard measure of hotel-room prices and occupancy, is now expected to fall 0.7% this year, according to a new report by the New York consulting group PricewaterhouseCoopers. Just two months ago, PricewaterhouseCoopers estimated that the figure would climb 3% for the year. Hotel prices, which were expected to rise 1% this year, are now forecast to decline 0.3%. Occupancy rates are also expected to fall 0.3% to 59.8% this year, instead of an expected 1.2% increase.
The New York consulting group revised its forecast downward after economists significantly cut their estimates of gross domestic product growth for the year to 2.7%. Also, demand for hotel rooms, as it relates to growth in GDP, is now at its lowest level since the 1929 stock market crash, says Bjorn Hanson, chairman of PricewaterhouseCoopers's lodging practice. People were staying in hotels at higher rates even during the Gulf War, the Cuban Missile Crisis and the 1970s energy crisis, Mr. Hanson said. The periodic terrorism alerts issued by federal agencies and the White House are also negatively affecting the hotel recovery, Mr. Hanson said. "It's assumed that will subdue the summer leisure travel recovery and will have some effect through the third quarter," he said.
Mr. Hanson says that despite the negative outlook this year, a recovery is still under way in the industry as shown by a modest 1.3% increase in demand for hotel rooms this year. "If it were a true recession we would see demand continue to decline. We hit a bottom in 2001," he says. Revenue per available room is expected to see a strong increase in 2003 of 5% and rise an additional 4.9% in 2004.
http://online.wsj.com/article/0,,SB1023055960332165800,00.html?mod=TOPIC
Revenue per available room, a standard measure of hotel-room prices and occupancy, is now expected to fall 0.7% this year, according to a new report by the New York consulting group PricewaterhouseCoopers. Just two months ago, PricewaterhouseCoopers estimated that the figure would climb 3% for the year. Hotel prices, which were expected to rise 1% this year, are now forecast to decline 0.3%. Occupancy rates are also expected to fall 0.3% to 59.8% this year, instead of an expected 1.2% increase.
The New York consulting group revised its forecast downward after economists significantly cut their estimates of gross domestic product growth for the year to 2.7%. Also, demand for hotel rooms, as it relates to growth in GDP, is now at its lowest level since the 1929 stock market crash, says Bjorn Hanson, chairman of PricewaterhouseCoopers's lodging practice. People were staying in hotels at higher rates even during the Gulf War, the Cuban Missile Crisis and the 1970s energy crisis, Mr. Hanson said. The periodic terrorism alerts issued by federal agencies and the White House are also negatively affecting the hotel recovery, Mr. Hanson said. "It's assumed that will subdue the summer leisure travel recovery and will have some effect through the third quarter," he said.
Mr. Hanson says that despite the negative outlook this year, a recovery is still under way in the industry as shown by a modest 1.3% increase in demand for hotel rooms this year. "If it were a true recession we would see demand continue to decline. We hit a bottom in 2001," he says. Revenue per available room is expected to see a strong increase in 2003 of 5% and rise an additional 4.9% in 2004.
http://online.wsj.com/article/0,,SB1023055960332165800,00.html?mod=TOPIC