“Hotels & Lodging Stock Review - March 2010 (Zacks.com via Yahoo! Finance)” plus 1 more |
| Hotels & Lodging Stock Review - March 2010 (Zacks.com via Yahoo! Finance) Posted: 01 Mar 2010 11:32 AM PST The operating environment in the hotels and lodging industry has continued to deteriorate in the last several quarters, and we expect the operating metrics to remain stretched in the near term. As the recession continues, both business and leisure travelers are cutting back on trips. However, with some early signs of economic recovery, the industry is experiencing an increase in demand. While hotel occupancy levels have somewhat improved, we noticed that pricing pressures persists as hotels continue to offer heavily discounted rates to draw in travelers. As such, we expect profits to remain restricted in this environment. In evaluating hotel companies such as Starwood Hotels and Resorts Worldwide Inc. (NYSE: HOT - News) and Marriott International Inc. (NYSE: MAR - News), we will be paying close attention to changes in average daily room rates as an indication of how quickly the sector may recover once the economy improves. A key operating metric in the lodging industry is RevPAR (revenue per available room). This metric is derived by multiplying the occupancy percentage of a hotel over a given period by the average daily room rate (ADR) over that same period. Changes in either occupancy or ADR will impact RevPAR, but with different implications for bottom-line profitability. Given the current state of the U.S. economy, it is no surprise that hotel occupancy percentages have been down. However, some hotel owners have initiated a slashing of room rates in an attempt to fill beds. In most cases, this tactic will result in material long-term damage to the business for two primary reasons:
Ultimately, the ability of lodging companies to maintain room rates as much as possible should have a significant impact on their ability to weather the downturn. Cutting rates meaningfully should be an absolute last-ditch effort to survive. By keeping an eye on changes in ADR, investors can gain some insight to the companies that are the best poised to benefit when economic growth rebounds. OPPORTUNITIES According to the data from Smith Travel Research, the U.S. hotel industry reported declines in all three key performance measurements during Jan. 2010. The industry's occupancy remained almost flat with a 0.4% decrease to 45.1%. Average daily rate declined 7.1% to finish the month at $93.93. These declines resulted in a 7.4% drop in RevPAR in January to finish at $42.35. What we see is an improvement in occupancy levels from the prior periods. Additionally, the deterioration in other hotel industry performance metrics have started to moderate. We believe that the recovery of the hotel industry has begun. This trend of positive demand growth is expected to continue with the rebound of the economy in 2010. For instance, we are positive about the prospects of Red Lion Hotels Corporation (NYSE: RLH - News), which has a Zacks #2 Rank (Buy). Going forward, we expect stability in the hotel industry performance metrics. However, the pace of improvement is expected to slow as the economy is projected to improve at a sluggish rate this year. We also note that the year-over-year comparison in the fourth quarter of 2009 was easier as this quarter reflected the one-year anniversary of the abrupt decline in lodging demand. When researching potential investments in the sector, however, we would advise investors to pay close attention to the ADR reported by lodging companies. We expect that companies with a solid balance sheet will be the best able to maintain room rates through the downturn and be better positioned to capitalize with improvements in the economic conditions. There are currently a number of stocks in the hotel industry universe with a Zacks #3 Rank (Hold) including Marriott, Starwood, Choice Hotels International Inc. (NYSE: CHH - News), Great Wolf Resorts Inc. (NasdaqGM: WOLF - News), Home Inns & Hotels Management Inc. (NasdaqGS: HMIN - News), Hyatt Hotels Corporation (NYSE: H - News), Intercontinental Hotels Group plc. (NYSE: IHG - News), Interstate Hotels & Resorts Inc. (NYSE: IHR - News), Lodgian Inc. (AMEX: LGN - News), The Marcus Corporation (NYSE: MCS - News), Orient-Express Hotels Ltd. (NYSE: OEH - News) and Wyndham Worldwide Corporation (NYSE: WYN - News). We believe that companies such as Marriott and Starwood are better positioned to command a premium room rate relative to the overall lodging industry. WEAKNESSES Though occupancy levels have somewhat stabilized, the rate of decline in ADR has continued. This clearly indicates a slow recovery of the industry. Given the lower levels of room revenue, we expect margins to remain restricted in the near term. Corporates are controlling their expenses more than they ever have. Additionally, the unemployment rate is also expected to remain high in 2010. These factors are pushing the room rates down as hoteliers are desperately looking to fill up their rooms by slashing rates. Also, with new hotels continuing to open, we noticed that supply hasn't slowed as expected earlier. In addition, companies with weak balance sheets -- or even limited financial flexibility -- will likely have a harder time navigating the challenges created by the economic recession. Hence at this moment, it is difficult to become extremely positive on any stock and this reflects in our Hold recommendations on the majority of stocks in our coverage universe. We are also concerned about the prospects of Morgans Hotel Group Co. (NasdaqGM: MHGC - News) which currently has Zacks #4 Rank (Sell).
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| Posted: 01 Mar 2010 05:56 PM PST {"s" : "expe","k" : "c10,l10,p20,t10","o" : "","j" : ""} DALLAS, March 1 /PRNewswire-FirstCall/ -- Hotels.com®, the largest provider of lodging worldwide, today unveiled its 2009 Hotel Price Index™ (HPI®), the definitive annual report on hotel prices paid around the world. The index shows hotel prices in the U.S. fell 14 percent during the last half of 2009 compared to rates in the same time period in 2008. Hotels.com attributes the falling prices in North America to the economic slowdown and the subsequent reduced demand for rooms. To view the multimedia assets associated with this release, please click: http://multivu.prnewswire.com/mnr/hotels/42712/ (Photo: http://www.newscom.com/cgi-bin/prnh/20100301/MM62696 ) With 2009 being the year of the travel deal, some cities did see a rise in prices paid as a result of the cause to currency movements, but also with travelers spending more for a little more luxury. The gap in price between 3, 4, and 5 star hotels narrowed in 2009 meaning travelers could spend less to get more. 2010 promises to be another great year for the travel deal and value. The HPI also found there was a slowdown in price cuts, potentially showing a leveling off of prices for 2010. Prices dropped 16 percent year-over-year in Q1, 17 percent in Q2, 14 percent in Q3, and finally down to 7 percent in Q4. In fact, for the first time since the HPI has been released, US hotel prices are at the level they were in 2004, dramatically falling from the peak prices seen in 2007. "2009 proved to be a great year for consumers looking for rooms at reasonable rates, especially in cities that are major tourist attractions such as New York, where prices dropped nearly 25 percent," said Scott Booker, vice president, global retail, Hotels.com. "Despite signs that prices of hotel rooms are leveling off, consumers can be certain that they'll always get the best deal possible on Hotels.com, thanks to our Price Match Guarantee, welcomerewards™ loyalty program and best in class promotions and deals." Click http://hotels.mediaroom.com/ for a look at the entire report, featuring infographics and a detailed state-by-state and city-by-city breakdown. Key Findings:
About the HPI: The Hotels.com Hotel Price Index (HPI) is a regular survey of hotel prices in major destinations across the world. The HPI is based on bookings made on Hotels.com and prices shown are those actually paid by customers (rather than advertised rates) in 2009. Approximately 94,000 properties in more than 16,000 locations make up the sample set of hotels from which prices are taken. About Hotels.com Hotels.com® is a leading provider of lodging worldwide, offering more than 85,000 properties in over 60 countries from national chain hotels and all-inclusive resorts to local favorites and bed & breakfasts. With services such as welcomerewards™, an industry leading loyalty rewards program; the real opinions of other travelers captured in the over 1.5 million Guest Reviews and; a Price Match Guarantee, so that those booking with Hotels.com can be assured they are getting the best deal, either online or by speaking directly to a travel expert at 1-800-2-HOTELS 24 hours a day. Hotels.com, A Smarter Way to Book™. For more information, please visit hotels.com. Hotels.com is an operating company of Expedia, Inc. (Nasdaq:EXPE - News). Hotels.com, Hotel Price Index, HPI, welcomereward and the Hotels.com logo are either registered trademarks or trademarks of Hotels.com, LP, a subsidiary of Hotels.com. Other logos or products and company names mentioned herein may be the property of their respective owners © 2010 Hotels.com, LP. All rights reserved. CST # 2083949-50 Five Filters featured article: Chilcot Inquiry. Available tools: PDF Newspaper, Full Text RSS, Term Extraction. |
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