Hotel chains get pummeled by economy
May 06, 2008 | Hospitality Industry
The $109 billion lodging industry is facing a triple squeeze play-- weakening demand, higher operating costs and more supply coming on-line.
“The twin effect of the economic downturn and the increase cost in gas prices just has people more economically-minded than we have seen since 2001, “ says Rod Caborn, executive vice president, at Ypartnership, a leading consumer research firm.
And if that weren’t enough, there’s a home-grown problem – the industry’s enduring penchant for building into a down-cycle.
A net increase of 200,000 rooms is to come on-line this year and next, adding nearly five percent to the US inventory of 4.5 million rooms.
“Unfortunately for industry this [extra supply] is going to coincide with weaker demand and that’s probably when you will see pricing power weaken further,” Chris Woronka, gaming and lodging analyst with Deutsche Bank.
Get the full story at CNBC
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