Mega Hotel Chains Share Pain

Hilton Hotels Corp. today announced earnings for the first half of 2002, results consistent with earnings previously announced by Marriott International and Starwood Hotels & Resorts Worldwide, its main U.S. multi-brand hotel competitors. Hilton said its net income was down 22 percent for the first six months, compared with the same period last year. As did Marriott and Starwood, Hilton pointed to declines in average daily room rates resulting from the economic slowdown as the cause of the drop in income.

Transient business travel levels particularly were depressed during the period. Hilton, Marriott and Starwood full-service brands also have an especially strong presence in the key gateway cities, where cutbacks in business travel have been felt most severely. The multi-brand companies' performance indicates that they will be at a relative disadvantage as negotiations for 2003 rates begin to get underway. Buyers are in their strongest bargaining position with hotels since 1996.