April 2008 VOL. 2

Did you Know?

A weak U.S. dollar may be the primary factor in the ongoing solid performance of the U.S. hospitality sector in 2008, according to a report released today by Ernst & Young's Global Real Estate Center.

The continued weakness of the dollar is producing multiple beneficial effects on the U.S. hotel market and it may may pull the sector through current recessionary pressures, says Michael Fishbin, Ernst & Young's U.S. director of hospitality & leisure.

Today, international tourists are looking to the U.S. as a prime vacation spot and are spending more money, often upgrading to higher-end and even luxury accommodations because their local currency now buys, in some cases, more than twice what it did just a few years ago. Total arrivals in the U.S. have witnessed 18 months of successive growth since April 2006, according to the U.S. Department of Commerce. In the first 11 months of 2007 international visitors spent US$111.6 billion, up 13 percent from the first 11 months of 2006.

Fishbin also points to a parity between the U.S. and Canadian dollars, which has increased Canadian spending power south of the border, and to the euro, which has strengthened from one euro per dollar to 0.66 euros per dollar in recent months. The same exchange rate economics also benefit foreign business travelers who are now able to leverage the strength of their home currencies to take longer stays in US hotels, according to Fishbin.

As long as this exchange rate bonus exists for non-U.S. travelers, the benefits will be seen at hotels from ski resorts in Vail and Aspen to cruise ports such as San Diego, Seattle and Miami and traditional tourist and business destinations such as New York, Orlando and San Francisco, Fishbin says.