Major Hoteliers Post Strong Third-Quarter Results
<B>Major Hoteliers Post Strong Third-Quarter Results</B>
By Bruce Serlen
Major hotel companies, including Marriott International, Hilton Hotels Corp., Starwood Hotels & Resorts Worldwide and Bass Hotels & Resorts, recently reported strong sales and earnings for the third quarter and the first nine months of 2000.
The results suggest that it continues to be a seller's market for travel managers as they enter into negotiations with these hotel companies to determine 2001 rates. Given their strong performances in the quarter--and the likelihood it will continue to year-end--the hotels are less inclined to either make concessions on rates or throw in any value-added amenities, such as complimentary parking or breakfast.
Marriott Lodging, for example, reported a 20 percent increase in operating profit on 12 percent sales growth in the third quarter. Results reflect gains in both room rates and occupancy. "Across all of Marriott's brands, revenue per available room, an important indicator of profitability, increased 8.5 percent in the period for company-owned U.S. properties, reflecting strength in transient and group demand," said J.W. Marriott Jr., chairman and CEO, in reporting the results. He cited properties in New York, Boston, Chicago and California as particularly strong performers. Not surprisingly, these are among the locations where buyers have been having an especially difficult time finding room availability midweek.
Likewise, Hilton cited continued high demand for hotel rooms in many major U.S. cities and limited new competitive supply in markets where it has a major ownership presence as reasons for its strong RevPAR increases of 11.3 percent for the quarter.
In announcing the results, Hilton president and CEO Stephen Bollenbach singled out Doubletree for its renewed growth. "Doubletree continued its rebound with comparable owned-or-operated RevPAR, up 8.2 percent in the quarter," he said. In the period, Doubletree was able to raise its average daily rate by 5.8 percent. The brand also opened three new properties, equaling 519 rooms.
Bollenbach also took the opportunity to mention an individual hotel, the Hilton at Logan Airport in Boston, for its successful performance during the quarter. Airport hotels in gateway cities generally run at high occupancies and are especially profitable for their operators (BTN, Oct. 16).
Starwood reported that RevPAR at its owned hotels increased 10.5 percent for the quarter over the prior year, while ADR was up 6.9 percent. The performance of the North American properties was stronger than in other parts of the world.
According to Barry Sternlicht, chairman and CEO, W Hotels was the standout among Starwood's brands: RevPAR at W's company-owned properties in North America increased 37.7 percent. In the number-two spot was the St. Regis/Luxury Collection, where RevPAR at company-owned hotels in North America rose 19.1 percent
Sternlicht also said that the company's strategy of concentrating its U.S. owned hotels on the East and West coasts was paying off. Like Marriott, he cited hotels in that same handful of cities--New York, Boston, San Francisco and Los Angeles--as particular success stories.
Given that it has a different fiscal year, London-based Bass PLC recently provided a trading report on the progress of its hotel properties in lieu of formal third-quarter earnings. Bass' outstanding performer was Inter-Continental Hotels, which saw RevPAR for its European properties increase 9.1 percent, while RevPAR for its North American properties jumped 7.4 percent. Crowne Plaza, meanwhile, had a strong quarter as well, with RevPAR for its North American properties rising 7.2 percent.
Sir Ian Prosser, Bass PLC chairman, also commented on Bass' growth in the midprice lodging category, a sector that is expanding industrywide. "We now have 2,254 midscale hotels in the Americas, compared with 2,109 a year ago," he said. The number of rooms, meanwhile, increased 10,505. Bass' midprice brand is Holiday Inn.