News

THE UPS AND DOWNS OF HOTEL FINANCES

STARWOOD REVENUE SLUMP ...
STARWOOD HOTELS AND RESORTS is predicting a system-wide slump of between 12 and 15 per cent in revenues per available room this year. The grim forecast coincided with the announcement that the group's 2008 net income crashed 39.3 per cent from US$542 million to US$329 million. Even that figure was bolstered by a US$75 million gain from disposals. Total revenues held up reasonably well, down four per cent to US$5.9 billion, while costs increased just 0.1 per cent. "Given significant uncertainty in the global economy, it is very difficult to provide any definitive guidance [on the prospects for the rest of the year]," a statement warned. Starwood nevertheless expects to open between 80 and 100 new hotels this year.

MARRIOTT INCOME PLUMMETS ..
. MARRIOTT INTERNATIONAL'S INCOME for 2008 fell 26 per cent to US$555 million. Income for the final quarter of the year was 49 per cent lower, at US$121 million. Revenue for 2008 was on a par with 2007, at US$13 billion. Chairman and chief executive officer JW Marriott said: "Results in the fourth quarter of 2008 demonstrated the impact of economic disruption to our business."

The company expects this year's first-quarter revenue per available room (revPAR) to be 17 per cent lower in North America, and 15 per lower in the rest of the world, compared with first quarter 2008. For 2009 as a whole, Marriott International "expects the business environment to remain unpredictable", but estimates North American revPAR to be down 12-17 per cent, and international revPAR down 8-13 per cent.

... BUT IHG SHOWS A PROFIT
INTERCONTINENTAL HOTELS GROUP (IHG) has reported a 2008 operating profit of US$535 million, up 13 per cent on 2007's figure of US$474 million. Revenues were five per cent higher at US$1,854 million.

However, IHG admits a "sharp deterioration" in the fourth-quarter trading, and says "forward-bookings data shows no sign of improvement in the levels of demand". Chief executive Andrew Cosslett said: "The trading environment is very tough. The sharp deterioration that we reported last November has continued into 2009. "It has been clear for some time that 2009 would be a challenging year and we have taken action to prepare the business, including a significant reduction in costs."

IHG has nearly 620,000 rooms on its books, with a further 50,000 opening this year.