Lots of people were celebrating America's 236th birthday this past July 4, but hoteliers probably weren't among them.
A combination of consumer uncertainty over economies domestic and abroad, and, yes, a midweek Independence Day contributed to slowing third-quarter revenue growth and disappointing financial results for some of the world's largest hoteliers.
Starwood Hotels & Resorts and InterContinental Hotels Group (IHG) both reported last week that demand growth slowed from the first half of the year.
Starwood, the No. 2 publicly traded U.S. hotelier by sales, said its North American hotel revenue per available room (RevPAR) growth, excluding currency effects, slowed to 5.3% from 7.3% in the second quarter, while global RevPAR growth slowed to 4.7% from 6.9%. Revenue rose 6%, to $1.46 billion, slightly less than the $1.48 billion revenue estimated by analysts in a Thomson Reuters survey.
Starwood's net income rose 4.3%, to $170 million, from $163 million a year earlier, though excluding the effects of this year's completion of its St. Regis Bal Harbour vacation-rental property and other one-time items, profit fell. As for Starwood's brands, Aloft and W showed the strongest RevPAR growth.
Meanwhile, U.K.-based IHG, which reports full third-quarter financial results next week, said third-quarter U.S. RevPAR rose 4.6% from a year earlier, compared with a growth rate of 6.3% for the first three quarters of the year. Higher-end brands such as IHG's flagship badge and Hotel Indigo led the gains, while the company's Crowne Plaza, Holiday Inn and Holiday Inn Express badges had third-quarter RevPAR gains of between 4% and 5% for the quarter.
"The key question is whether this quarter's results reflect a recovery that's lost its steam," Starwood CEO Frits van Paasschen said on a conference call with analysts last week. "We won't know for a while."
On the more modest end of hotel chains, Choice Hotels International said last week that its third-quarter profit rose 4.9% from a year earlier, to $44.4 million, with RevPAR for its largely midscale brands up 5.6%. Revenue increased 9.4%, to $210.4 million
And Wyndham Worldwide last week reported third-quarter RevPAR growth of 5% at its hotels division, which includes budget brands such as Howard Johnson and Microtel Inns & Suites. Net income dropped to $159 million from $175 million a year earlier, largely because of the effect of changes in currency exchange rates on the company's vacation-rentals division. Revenue rose 4.4%, to $1.27 billion.
Across all hoteliers, U.S. RevPAR growth decelerated to 5.1% in the third quarter, from 7.9% in the second quarter, and was the slowest in six quarters, according to Smith Travel Research. Room rates were up 3.9% from a year earlier, while occupancy edged up by 1.2 percentage points.
How such demand growth is filtering through the hotel sectors remains in question, as no clear pattern has emerged between higher-end and budget brands.
For instance, Marriott, which reported earnings earlier this month, said its Ritz-Carlton, Renaissance and flagship brands outperformed more modest badges such as Courtyard and TownePlace Suites. And Choice International's RevPAR gains were led by its upscale Ascend Collection badge.
At Starwood, however, demand was down for St. Regis, the Luxury Collection and Le Meridien, while Sheraton's RevPAR held steady from a year earlier.
Hyatt Hotels reports its third-quarter earnings this week.