Global Growth Offsets U.S. Hotel Slowdown

Hotel companies reporting performance for the first quarter of 2008 showed slowing U.S. revenue growth, although international revenue growth remained strong enough to offset it.

InterContinental Hotels Group on May 7 reported that its revenue per available room increased by 2.3 percent in the Americas compared with the same period in 2007. RevPAR growth was higher in the Asia/Pacific region, with a 5.1 percent increase, and by 5.9 percent in Europe, the Middle East and Africa, meaning a total growth of 3.5 percent.

Starwood Hotels & Resorts Worldwide in late April reported a year-over-year revenue increase of 2.5 percent for the quarter, totaling $1.47 billion. In North America, RevPAR increased by 2.9 percent. Overall RevPAR was up by 8.4 percent, thanks to international growth of 15.5 percent.

Marriott International, similarly, reported North American RevPAR growth of only 2.3 percent for the quarter. Internationally, however, RevPAR grew by 18.5 percent, accounting for a 6 percent increase overall. Performance was particularly strong in Manhattan, Los Angeles, Orlando and Seattle, as well as Moscow, Singapore, Paris, Panama and Dubai.

Marriott also said rates, particularly in higher tiers, had not suffered. "While performance at our U.S. hotels reflected slowing economic growth, few markets have witnessed discounting, and full-service room rates rose 4 percent during the quarter," said Marriott CEO J.W. Marriott Jr.

While Marriott slightly lowered its earnings outlook, it maintained its forecast from earlier in the year expecting 2008 RevPAR growth between 3 and 5 percent. Starwood, meanwhile, raised its earnings outlook and said it expected RevPAR growth between 5 and 7 percent in North American and between 10 and 12 percent worldwide.

Wyndham Worldwide this month reported revenues for Wyndham Hotel Group were up 12 percent to $170 million for the quarter, spurred in part by increased property management reimbursable revenues. Systemwide RevPAR was up 2.7 percent for the quarter. Choice Hotels International, which, like Wyndham, focuses largely on the midprice and economy tiers, had comparable results. Its franchising and total revenues for the quarter were both up 12 percent, and domestic, systemwide RevPAR was up 2.7 percent.