For Immediate Release
Chicago, IL – March 2, 2010 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the Hotels & Lodging Industry, including Starwood Hotels and Resorts Worldwide Inc. (HOT), Marriott International Inc. (MAR) and Red Lion Hotels Corporation (RLH).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/31102/Hotels+%26amp%3B+Lodging+Stock+Review+-+March+2010.
Hotels & Lodging Stock Review – March 2010
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. (HOT) and Marriott International Inc. (MAR), 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.
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 (RLH), which has a Zacks #2 Rank (Buy).
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