Hotel 2Q Revenue Declines Despite Late Gains

Revenue per available room for U.S. hotels, an important indicator of lodging industry profitability, decreased 3.1 percent in the second quarter, compared with the same period in 2002, according to statistics released today by Smith Travel Research. Hotel companies had indicated that revenues showed improvement in May and June, though not enough to overcome weak April results due to concerns surrounding the Iraqi war. "Results improved sequentially throughout the quarter," confirmed Harry Curtis, lodging and gaming industry analyst at J.P. Morgan.
For buyers, the quarter's weak showing further strengthened their already strong hand in rate negotiations for 2004 rates, which get underway in September.

Among hotel price points, the industry's deluxe segment showed the poorest performance. RevPAR for the segment fell 4 percent for the quarter, year over year. This is consistent with the segment's performance in the past 18 months when many buyers encouraged their travelers to book rooms at lower-priced hotel chains.