July Indicators Point To Higher Hotel Profits

Revenue per available room in U.S. hotels increased 1 percent to 3 percent in July year over year, according to preliminary figures released today by lodging industry consultants Smith Travel Research. Occupancy was up as much as 2 percent.

Midweek demand also was up for the week ending Aug. 2, suggesting to J.P. Morgan analyst Harry Curtis that business travel is improving. However, Curtis questioned if the positive July momentum would continue into the fall, when buyers begin negotiating 2004 rates.

Meanwhile, hotel companies last week reported an increase in individual reservation calls in most markets for September. Boston and Dallas were exceptions. Advance group bookings for the fall are weaker than expected, which could spoil any rebound and stall RevPAR improvements in the fourth quarter, Curtis noted.

Despite these short-term promising signs, CIBC analyst Paul Keung expressed caution: "The pricing environment remains severely challenged."