Fourth-Quarter Profits Lead to More Optimism

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The numbers weren't great by any means, but the recent fourth-quarter financial results from the major publicly-held hotel companies weren't as bad as they could have been, and quite frankly, as bad as they had been the previous year. Most used the words 'earnings' and 'profits,' which were quite an improvement over last year's 'losses.' It's more positive news coming on the heels of the moderately and surprisingly upbeat mood at the Americas Lodging Investment Summit last month.

Starwood opened the earnings calls on Feb. 4 with a fourth-quarter loss ($107 million, largely due to charges in the vacation ownership business), but RevPAR fell only 7.9 percent, the best number in two years. Amid the strengthening demand, Starwood changed its outlook for 2010 to flat to positive five percent growth in RevPAR from flat to down five percent.

Marriott turned a fourth-quarter profit ($106 million) and RevPAR was down 12.2 percent, but improved occupancy numbers led to an improved 2010 RevPAR projection, now up two percent to down two percent, from the earlier projection of flat to down five percent. Wyndham also swung to a profit ($73 million), RevPAR declined 11.9 percent and the company said it could turn positive by midyear.

Choice Hotels posted an increased profit ($23.6 million vs. $18.7 million a year ago), but RevPAR fell 14.4 percent and the company was less optimistic than its higher-end counterparts, calling for a two to four percent drop in RevPAR this year. Recovery so far has been at the higher end, as Starwood and Marriott's results indicate, but the luxury and upscale segments clearly fell the furthest and have the most ground to gain.

Who knows what all these numbers mean, but less bad and maybe kind of good is certainly better than horrible and dire, which is what we heard all of last year. Demand is clearly starting to grow, and although we know rate won't be nearly as quick to follow, at least there's some level of hope it will sooner than later.

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