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US hotel industry has record year for profits
The US hotel industry had its best year ever in 2005, generating almost $128 billion in revenues and more than $22.6 billion in profits, according to a new study.
Profits last year were slightly above the $22.5 billion the industry made in the year 2000, which was the highest level achieved, said Smith Travel Research (STR).
“The hotel industry is fifing on all cylinders,” said Randy Smith, founder and CEO of STR.
“Nationwide average daily rate (ADR) and occupancy figures increased 5.4% and 2.9% respectively n 2005,” he added.
He said the industry has rebounded substantially since 9-11.
Higher group business and a limited number of new hotels should mean even higher occupancies and room rates in the future, said Mark Lomanno, president of STR.
“We estimate that the industry will open 75,000 new rooms in 2006, roughly a 1.2% supply addition. This increase in new rooms is still well below the historical average of 2.1%,” he said, predicting the hotel business will do well through the year 2008.
The only downside to the study was that rising labor, energy and insurance costs have cut profits in the industry.
“Profits as a percentage of revenue in 2005 was 18.4%, well below the 20.1% profit margin we reported in 2000,” said Mr Lomanno.
Report by David Wilkening
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