For Immediate Release
Chicago, IL – October 13, 2010 – Today, Zacks Equity Research discusses the Hotels & Lodging industry, including Home Inns & Hotels Management Inc. (HMIN), Intercontinental Hotels Group plc. (IHG), Wyndham Worldwide Corporation (WYN), Starwood Hotels and Resorts Worldwide Inc. (HOT) ) and Marriott International Inc. (MAR ).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at www.zacks.com/stock/news/41420/Hotels+%26amp%3B+Lodging+Industry+Outlook+-+Oct.+2010
Hotels & Lodging
We believe that the recovery of the hotel industry has begun. The trend of positive demand growth is expected to continue in 2010 and beyond driven by economic recovery. According to the data from Smith Travel Research, the leading information and data provider for the lodging industry, the U.S. hotel industry reported mostly positive results on all three key performance measurements – occupancy level, ADR and RevPAR – during the week of 12–18 September 2010.
Comparing the operating metrics with the prior-year period, the industry’s occupancy increased 6.7% to 63.5%. Average daily rate ended the week with a rise of 1.8% to about $100. As a result, RevPAR rose 8.6% to $63.66. Moreover, supply is expected to grow 2.2% during 2010 and demand is projected to increase 6.6%.
Smith Travel Research projects that the hotel industry will end 2011 with increases in all three key metrics. Occupancy is forecast to rise 1.4% to 57.9%, ADR is expected to be up 3.9% to $101.55, and RevPAR is projected to rise 5.3% to $58.75. Supply during 2011 is expected to grow 1.1% and demand is projected to rise 2.5%.
The operating environment in the international market is better, which is driving hoteliers to increase their share of the overseas pie. Hotels in the Asia-Pacific region experienced increases on all three key performance metrics for August 2010, according to data from Smith Travel Research. The Asia-Pacific region’s occupancy rose 5.8% to 67.2%, ADR increased 10.0% to $129.00 and RevPAR jumped 16.5% to $86.74.
The hoteliers are also focused on rebalancing their portfolio by increasing the contribution from managed and franchised hotels. This fee-based business is attractive as growth is powered by multiple sources — RevPAR growth, unit additions and incentive fee escalation. The business is also capital efficient as the owner/developer partners provide the capital and the company then earns a fee managing/franchising the property. Additionally, the fee business is less cyclical than owning hotels.
Currently, there are a number of stocks in the hotel industry universe with a Zacks #1 Rank (Strong Buy). These include Home Inns & Hotels Management Inc. (HMIN), Intercontinental Hotels Group plc. (IHG) and Wyndham Worldwide Corporation (WYN). The stocks with a Zacks #2 Rank (Buy) are Starwood Hotels and Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR ). We believe companies such as Wyndham are better positioned as we expect these companies to benefit from their repositioning as a more fee-for-service based business. Marriott and Starwood should also benefit from their global pipeline.
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HOME INNS&HOTEL (HMIN): Free Stock Analysis Report
STARWOOD HOTELS (HOT): Free Stock Analysis Report
INTERCONTL HTLS (IHG): Free Stock Analysis Report
MARRIOTT INTL-A (MAR): Free Stock Analysis Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
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