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Year-End Results Show Positive Industry Uptick

Year-End Results Show Positive Industry Uptick

End-of-the-year earnings statements released by major hotel companies show that the industry ended 2013 on a positive note, with gains in RevPAR, occupancy, and ADR.

Although some companies saw a drop in fourth-quarter revenues, year-end results for the majority remained largely favorable.

The positive performance was aided by the recovery of the North American market, and company executives said that strong demand in the U.S. helped to drive up their overall earnings.

“The lodging recovery in North America continued unabated, driven by strong corporate transient demand,” said Fritz van Paasschen, president and CEO of Starwood Hotels and Resorts Worldwide, on a call to analysts and investors. “We’ve now seen three quarters in a row of record occupancy.”

Starwood saw RevPAR increases of 6 percent in North America. Marriott saw a 5 percent boost with big gains in San Francisco, Houston, and Miami. Choice Hotels and InterContinental Hotels Group (IHG) both saw domestic increases of 3 percent and 4.2 percent respectively. Hilton saw a 2013 RevPAR boost of 5.2 percent in the Americas compared to 2012.

Hilton’s fourth quarter earnings were down 57 percent due to IPO-related costs. The Blackstone-owned company went public in December, and raked in $2.3 billion—marking the largest hotel IPO of all time. Despite the IPO-related expenditures, Hilton revenue grew 13 percent in the fourth quarter to $2.64 billion, with year-end revenues totaling $9.73 billion.

Development and hotel deals grew steadily in 2013, demonstrating that capital markets are rebounding and financing for new construction is more readily available. “We opened 237 hotels and signed 444 properties into our pipeline, which is the highest number in the last five years,” said Kirk Kinsell, president, the Americas, IHG. “Our growth mix is about 80 percent new development and 20 percent conversion.”

On an earnings call, Choice Hotels President and CEO Steve Joyce also added that the development landscape looks promising. “We are encouraged that new construction deals increased 13 percent for the fourth quarter and have now increased year-over-year in nine of the last 10 quarters.”

 

Choice Hotels International
- Domestic, system-wide RevPAR increased 3 percent in 2013.
- Revenues in 2013 totaled $724.3 million, an increase of 5 percent from 2012.
- Executed 530 new domestic hotel franchise contracts in 2013, an increase of 57 contracts compared to 2012.

2014 Outlook: Choice expects RevPAR to increase approximately 4 percent for the first quarter and 3.5 percent to 4.5 percent for the full year.

Company Statement: “Our investment in additional growth opportunities that are complementary to our core hotel franchising business model has resulted in our strategic alliance with Bluegreen Vacations as well as the launch of our SkyTouch division,” said Steve Joyce, president and CEO, Choice Hotels International. “We are pleased with the progress we have achieved in both of these initiatives. Our alliance with Bluegreen Vacations has resulted in more than 20 new Ascend Hotel Collection hotels and has generated approximately $3.5 million of total revenues in 2013.”

 

Marriott International
- North American company-operated RevPAR rose 5.4 percent in 2013.
- Revenues up 8 percent from 2012 to $12.78 billion.
- The company signed a record 67,000 rooms in 2013.

2014 Outlook: RevPAR is expected to increase 4 to 6 percent in North America, 3 to 5 percent outside North America, and 4 to 6 percent worldwide.

Company Statement: “2013 was a year of firsts. Strong RevPAR growth and new hotels drove Marriott’s fee revenue to a record $1.5 billion,” said Marriott President and CEO Arne Sorenson. “We signed contracts with owners and franchisees for 67,000 new rooms, the most productive year in our history averaging more than one hotel every day. Our development pipeline reached a record 195,000 rooms.”

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