Hotel CEOs See Signs Of Recovery

Stephen Bollenbach, president and CEO of Hilton Hotels Corp., today cited pent-up demand among business travelers as a prime driver behind the increase in hotel occupancy in April and May, following a flat first quarter of the year.

"Things are getting better," he said. Reservations on the Hilton books suggest that this summer should show a moderate increase over last summer. Bollenbach along with J.W. Marriott Jr., chairman of Marriott International; Marilyn Carlson Nelson, chairman and CEO of the Carlson Cos.; and Henry Silverman, chairman and CEO of Cendant Corp., appeared at today's opening of the 25th annual New York University Hospitality Investment Conference in New York.

Nelson cautioned that any positive movement in either business or leisure travel could be tempered by such bad news as a new terrorist attack or the spread of severe acute respiratory syndrome. The hoteliers said, however, that travel levels had not dipped during the most recent federal terrorist alert before the Memorial Day weekend as they had during previous alerts. "This suggests the traveling public is more comfortable that the travel industry will be prepared to handle any eventuality," Bollenbach said.

Marriott, who noted that the present lodging downturn was the worst the industry had ever experienced, described his company as "cautiously optimistic." He cited high levels of consumer confidence as a good sign, but said that any business travel rebound still was dependent on a healthy return of corporate profits. "This will result in companies reinvesting in their businesses, which, in turn, will be accompanied by increased levels of business travel," he said. He added that Marriott's meetings business for 2004 is seeing an uptick.

Nelson noted that any rebound would be led by such specific industries as pharmaceuticals and telecommunications, rather than an across-the-board upturn. "Technology companies that had not been traveling have shown signs that they are beginning to resume traveling," she said.

According to Nelson, Carlson's hotel and cruise businesses showed a strong pick-up in the past couple of weeks. She also noted that Carlson's meetings and incentive business is well ahead of its goals for next year, already having booked 80 percent of its projected revenues.

Silverman said that the drive-to portion of the business travel market was holding up better than travel to destinations that require flying. This has benefited midprice brands, which tend to have most of their inventory in suburban or highway locations. Cendant's brands operate in this price point. Bollenbach and Marriott confirmed that their midprice brands were doing better as well, relative to their full-service counterparts.