Does the Slowing U.S. Economy Mean Trouble For the Hotel Industry?
The U.S. hotel industry continued to perform well during the third quarter despite slowing employment growth and tepid GDP. Choice Hotels International (CHH), operator of brands such as Comfort Inn and Econo Lodge, saw its domestic revenue per available room (RevPAR) rise 5.8% year over year in the quarter. RevPAR is a key industry metric that is calculated by multiplying a hotel’s average daily room rate (ADR) by its occupancy rate. Choice Hotels’ occupancy levels improved by about 120 basis points from the prior year amid more demand for rooms from business and leisure travelers. The theme that the hotel industry weathered the third quarter economic slowdown in the U.S. well was seen at Choice Hotels’ competitors Marriott (MAR) and Hilton (HLT), where RevPAR rose by 4.2% and 5.8%, respectively year over year. Still, in spite of the gains in RevPAR and occupancy, Choice Hotels’ third quarter earnings only matched Wall Street profit forecasts calling for $0.72 a share. Further, the rate of occupancy and RevPAR growth was slower than experienced in the second quarter. The company also tweaked its full year earnings guidance to $2.18-$2.20 a share from $2.18-$2.22 a share previously. When asked if Choice Hotels was feeling the effects of a slowing U.S. economy, president and CEO Steve Joyce downplayed any impact. TheStreet’s Brian Sozzi reports from New York.
