Earnings Show Midprice, Budget Hotel Tier Muscle

The strength of the hotel market is boosting the midprice and budget tiers, as evidenced by earnings results from Choice Hotels International and Wyndham Worldwide this week.

In 2006, revenue per available room for Choice—which includes such midprice brands as Comfort Inn, Comfort Suites and Quality Inn as well as economy brands Econo Lodge and Rodeway—was up 6.1 percent compared with 2005, including a 3.7 percent increase in the fourth quarter, the company reported in a conference call with investors today. This was strongest of Choice's midprice without food and beverage brands, which had a combined 9 percent increase in RevPAR for the year and a 6 percent increase for the quarter.

Average daily rates for the year increased across all company brands. Overall, rates increased 5.2 percent from 205 levels, and rates were up an average of 6.5 percent for the Comfort Inn, Comfort Suites and Sleep Inn brands.

Earnings for Choice were up 15 percent to $176 million for the year and up 10 percent to $39.9 million in the fourth quarter.

Wyndham, parent company to the its upscale namesake brand as well as the midprice and economy Ramada, Days Inn and Travelodge brands, reported Tuesday that its RevPAR had increased by 13 percent in 2006 compared with 2005. Sales for the fourth quarter were up 13 percent to $970 million, which boosted fourth quarter earnings slightly to $92 million, compared with $91 million in the fourth quarter of 2005.

The quarter was Wyndham's first since spinning off as a stand-alone company from Cendant Corp. in July.