12/11/2001 (Reuters via ChicagoTribune.com) Shares in U.S. hotel and casino operators marked a milestone of recovery last week by rising to pre-Sept. 11 levels on indications that business and leisure travel are coming back more strongly than expected from the depths of the recent crisis.
The rebound in share prices marked a strong comeback for the sector, where stocks plunged in late September as a travel crisis took hold after the hijacking attacks on the World Trade Center and the Pentagon.
That recovery has been felt in other related industries that suffered in the wake of the attacks, with shares of major airlines, cruise lines and online travel services posting significant gains so far in the fourth quarter.
Amid widespread concern that business and leisure travel would drop sharply, having a trickle-down effect across various industries, the sector is starting to show more signs of life.
Data released by Smith Travel Research last week showed U.S. hotel room revenues were down 14.1 percent in the final week of November. The showing was the third in the last four weeks that revenue per available room, the industry benchmark, was down 15 percent or less compared with last year.
In the four weeks before that, room revenues appeared to be leveling of at 17 percent to 19 percent below year-earlier levels, leading some analysts to say that the recovery for the industry might have plateaued after an initial rebound in early October.
Also Wednesday, Host Marriott Corp., one of the nation’s biggest hotel owners, said room revenues and margins have held up better than expected in the wake of the Sept. 11 attacks.
The company said that revenue per available room was down 25.8 percent in the four weeks ended Nov. 2, a marked improvement over a 42.7 percent drop in the four weeks ended Oct. 5.
Host Marriott said it “has continued to see improvement” in the measure since Nov. 2, “although results were still well below prior year levels.”
People traveling more
Credit Lyonnais Securities analyst Bryan Maher said the latest news marks the continuation of a trend of people getting back to work and play.
“We postulated that business travelers and consumers would find a way to deal with changes in business and leisure travel, be that by driving, taking the train or in some other way,” he said. “Business travelers need to get out and see their clients, and people have an embedded desire to travel. You can only keep them in their houses for so long.”
The latest encouraging news helped stocks from the hotel and related casino industries rally, with many reaching or surpassing their pre-Sept. 11 levels.
Last week, Starwood Hotels & Resorts Worldwide Inc. and Hilton Hotels Corp. watched their shares rise after ABN Amro tagged the pair as “the best plays for a late 2002 recovery in travel.”
ABN Amro analyst Joseph Greff said his firm hosted a series of meetings in New York between investors and a Starwood spokesman. “Though the current state of lodging fundamentals can be best described as terrible, but not as terrible as one month ago, the tone of the meetings was, in general, very upbeat,” Greff wrote in a research note.
Starwood is up nearly 63 percent since Sept. 21, when most lodging and gaming stocks bottomed after the Sept. 11 attacks. That gain is significantly better than the Standard & Poor’s 500 index’s 19.9 percent rise during the same period, but Greff said ABN Amro still thinks the stock “has room to run over the next 12 to 18 months.”