REPORT FROM THE U.S.—The hotel sector’s future is looking bright judging by the recent upgrades to 2010 guidance offered by some of the industry’s publicly traded companies.
Starwood Hotels & Resorts, Host Hotels & Resorts and Marriott International all increased their guidance for 2010 while reporting first-quarter results during the past two weeks.
Starwood indicated on 29 April that 2010 revenue per available room at same-store company operated hotels worldwide might be up 5 percent to 8 percent in constant dollars and approximately 100 basis points higher in dollars at current exchange rates. RevPAR at branded same-store owned hotels worldwide could also be up 4 percent to 7 percent in constant dollars and approximately 100 basis points higher in dollars at current exchange rates, the company added.
• Read, “Starwood reports Q1 results.”
Host also is optimistic.
“The Company believes that recent improvements in the economy will continue to positively affect the lodging industry and hotel operating results for the remainder of 2010,” Host said in its first-quarter report released 28 April. The company sees RevPAR increasing by 1 percent to 4 percent in 2010.
• Read “Host’s Q1 net loss widens.”
And Marriott on 22 April said it expects comparable system-wide RevPAR on a constant dollar basis to increase by 3 percent to 6 percent worldwide.
• Read “Marriott reports Q1 profit.”
Host and Marriott’s stock have each seen a bump in price since announcing the improved guidance figures. Host’s stock has gone up by 5.9 percent while Marriott’s has seen a 2.3-percent lift since reporting earnings.
Starwood’s stock, meanwhile, closed Monday at US$56.08, down 0.4 percent since the company released earnings.
Andrew Wittman, VP and senior research associate at Robert W. Baird & Company, said he senses a lot of optimism from the hoteliers with which his company has spoken.
Andrew Wittman, VP and senior research associate at R.W. Baird & Company
“When people started seeing transient business coming back (at the end of February), people started feeling a little better,” he said.
Hotels should be able to “eek out RevPAR gains” in 2010, Wittman said.
Challenges do still exist for the industry, however, Wittman cautioned.
One of the obstacles to recovery is an elevated unemployment figure, he said. The advance figure for seasonally adjusted initial unemployment claims decreased by 11,000 for the week ending 24 April to 448,000, the United States Department of Labor reported on 29 April. The four-week moving average, though, increased by 1,500 to 462,500.
“Although the leisure business has been a relative point of strength, consumer discretionary spend at hotels will remain under pressure while unemployment is high,” Wittman said.