First-Quarter Hotel Revenues To Surpass Projections

Wall Street lodging industry analysts last week received strong March data and on the basis of that projected that first-quarter earnings for a number of the multi-brand U.S. based hotel companies would surpass the companies' initial projections.

"We believe first-quarter revenues may have exceeded expectations," said UBS lodging industry analyst Will Truelove. "More surprising to us is the magnitude of the increase in room rates during a seasonally weak business travel quarter."

The "well-known lodging names" should outperform for the quarter, according to JP Morgan Chase analyst Harry Curtis, citing Hilton Hotels Corp., Marriott International and Starwood Hotels & Resorts Worldwide as examples. "Urban market revenue per available room growth, limited supply increases, accelerating business trends supported by solid gross domestic product growth should bode well for these companies," Curtis said.

The companies doing best are those with significant upscale and upper upscale inventory and a strong presence in downtown markets visited by business travelers. For the four weeks ending April 9, occupancy was up in each of the top 15 U.S. markets, compared with the same period a year ago. Average daily rate increased in 14 of the 15 with New York, San Diego and Los Angeles registering the largest gains. RevPAR was up in all 15 markets with New York showing gains, year over year, in excess of 20 percent.

Hilton and Starwood are particularly well positioned because they own, rather than only manage, many of their downtown hotels.