The U.S. hotel industry appears to be "on the verge of
a multiyear surge in rates," Starwood Hotels & Resorts CEO Frits van
Paasschen today said as the company reported that 2011 corporate rate
negotiations are about three-quarters complete.
In its fourth-quarter earnings call, Starwood officials said
2011 corporate rates are poised to increase on average by high single-digit
percentages. Starwood CFO Vasant Prabhu said industry recovery during the
fourth quarter of 2010 depended on strong growth in corporate transient
business, which occurred, and that further growth this year would depend on
rate.
"Hotel supply [in North America] is unusually tight at
this stage, with virtually no new hotels being built, and demand is strong and
getting stronger," van Paasschen said. "The next three to four years
could see the strongest real growth in rates in North America that we've seen
in decades."
Worldwide revenue per available room for the company's hotels
during the quarter increased year over year by 10.1 percent and by 10.3 percent
in North America, but as in the rest of the year, occupancy drove those
increases, not rate.
Global fourth-quarter occupancy increased from the fourth
quarter of 2010 by 4.7 percentage points to 65.8 percent, and by 4.8 percentage
points in North America to 64.3 percent. In most major markets, occupancy is
trending above 90 percent from Monday through Thursday, van Paasschen said.
Rates, however, increased only by 2 percent in North America and by 2.4 percent
globally during the quarter.
Net income was $339 million for the quarter, compared to a
loss of $107 million in the fourth quarter of 2009. Total revenues were $1.34
billion for the quarter, up 7.5 percent year over year.
For 2011, Starwood projects its RevPAR will continue to
increase between 7 percent and 9 percent above 2010 levels. Unlike last year,
the company expects at least half of that growth to be driven by rate
increases, Prabhu said.