Hotel Earnings Impart Mixed Signals

Fairmont Hotels and Resorts, LaSalle Hotel Properties and Choice Hotels International this week announced mixed third-quarter earnings, confirming that any meaningful hotel industry rebound was still a ways off. While such consultants as PricewaterhouseCoopers argue that the industry has reached the trough in revenues and occupancy in the two-year-long downturn, hotel companies continue to struggle.

At Fairmont, for example, revenue per available room was up 2.9 percent for the quarter year over year, but occupancy dropped more than 3 percent. RevPAR at LaSalle, an owner-manager based in Bethesda, Md., decreased 2.5 percent, while occupancy went up, though minimally. Meanwhile, RevPAR dropped minimally at Choice, which is solely a franchisor of midprice and economy brands, while income rose. The jump in income was attributed, in part, to increases in the number of U.S. hotel franchise contracts it completed. For buyers in the midst of negotiations for 2004 rates, the sense that the hotel industry continues to struggle can provide an extra psychological advantage.