Coming ahead: hotel slowdown
The hotel industry’s three-year boom may have peaked, tourism officials say.
The industry as a whole has enjoyed steeply rising room prices and high occupancy but one indication recently was that Marriott International cut back on its business forecast for the rest of the year.
“Despite a double-digit year-over-year growth in income, shares of the Bethesda, Md.-based company — and those of some competitors — fell even as stock indexes rose to record highs. Investors appear to react to Marriott’s scaling back of expectations for 2007,” said Reuters.
Resurgent demand from business travelers starting in 2004 after the post-9/11 travel slump ushered in a boom for the hotel industry. But travelers have been showing resistance to room rate increases.
Wall Street analysts have been warning in the past few months that the growth rate for the hotel business can be expected to slow.
“We’re now going to see a slow, moderate and healthy growth,” said Sean P. Smith, an analyst at Zacks Investment Research.
According to industry tracker Smith Travel Research, occupancy industry-wide will decline only slightly this year from 2006. The average daily rate in 2007 will be 6% higher than 2006, according to Smith Travel. That compares with 7.2% annual growth last year.
But even with a slowdown, travelers shouldn’t expect deep discounts, says Bjorn Hanson, an analyst for PricewaterhouseCoopers.
Report by David Wilkening
David
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