Word: hotels
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...filing comes as the debilitating recession, rising unemployment, a sharp pullback in business travel and weak consumer confidence have taken a crippling toll on hotels. In the first seven months of 2009, hotel occupancy was down 10.3% while average daily room rates are off 8.8%, according to Smith Travel Research (STR). At the same time, lodging stocks lost 80% of their value on average over the past year, although many have rallied back a bit in the past couple of months...
That's the question industry observers are asking as hotel powerhouse Hyatt Hotels prepares to jump into the public markets at a time when the lodging sector has spiraled to lows not seen since the Sept. 11 terrorist attacks...
...Hotels are highly sensitive to economic conditions, labor, cost of living and consumer confidence. So, when times are at the lowest like this, it's probably not the best time to go to the market and expect to get a huge payoff," says Mark Lunt, a principal in Ernst & Young's hospitality advisory practice. "It would appear that this is early in the cycle to have a hotel...
Hyatt is among those who have taken a hit in 2009. In the first six months, the hotel powerhouse posted a 19% revenue decrease, a loss of $36 million and a revpar decline...
...Hyatt acted faster and gone pubic in 2007 or even mid-2008, before the bubble burst, valuations would likely be much higher, says Butler. "The hotel world fell off a cliff on Labor Day 2008 - the world truly changed in terms of values, liquidity, banking - all of the factors that are critical to valuation," he says...