Hotel Analyst Reports Signs Of Stabilization

NEW YORK (AP) — The hotel sector is showing some signs of stabilization although industry conditions remain difficult, said a Friedman Billings Ramsey analyst on Wednesday.

C. Patrick Scholes said his contacts — hotel revenue managers from large private hotel companies — indicated that transient bookings, especially in the leisure segment, may have seen their steepest declines, but that room rates remain weak. As for groups business, Scholes said the pace of cancellations seems to have slowed, although fewer bookings are being made for 2009.

He also noted that the summer travel season should help spur demand in some "drive-in" markets, like New York, Washington and Boston.

Shares of hotel companies tumbled with the broader market on Wednesday as investors worried about the impact of weak consumer spending on the travel industry after the government reported weaker-than-expected retail sales in April.

The Commerce Department reported that retail sales slipped 0.4 percent last month, while economists had expected sales to be flat.

Shares of Marriott International Inc. fell $1.51, or 6.7 percent, to $21.18, while shares of Starwood Hotels & Resorts Worldwide Inc. lost $1.43, or 6.8 percent, to $19.70.