Increased Q2 demand benefits U.S. hotels across all sectors

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U.S. hoteliers reported higher second-quarter revenue as increased travel demand across sectors ranging from luxury to budget indicated that the domestic travel recovery is trickling down from wealthier consumers to those with more modest budgets.

Starwood Hotels & Resorts and Wyndham Worldwide last week both reported higher second-quarter North American occupancy and room rates; as previously reported, Marriott International did the same earlier this month.

Starwood revenue up  

Starwood executives in a July 26 conference call described North America as a "safe haven" for the global travel industry. The company said its Q2 revenue rose 13% from a year earlier, to $1.62 billion, on a combination of more demand for its upscale brands and the January completion of its St. Regis Bal Harbour vacation-rental development in Florida.

Overall, net income fell to $122 million, from $131 million a year earlier, primarily due to a year-earlier tax benefit on the sale of two hotels. Earnings, excluding the year-earlier tax gain and other one-time items, rose 42%.

Starwood, whose sales among publically traded U.S. hoteliers trail only those of Marriott International, said July 26 that its global revenue per available room (RevPAR) increased 6.9% in constant dollars. North American RevPAR rose 7.3%, while Africa-Middle East and Asia-Pacific RevPAR advanced 11% and 9.3%, respectively. Such gains more than offset the impact of relatively stagnant business in Europe, where RevPAR increased 2.3%.

Demand increases were consistent across the board for Starwood brands. RevPAR at the W Hotels luxury brand rose 8.8%, while Starwood's upper-upscale Westin badge generated a 7.5% RevPAR increase.

"There's no talk among our corporate customers about cutting travel," Starwood CEO Frits van Paasschen said during the conference call. "Things aren't as bleak as headlines suggest, and we're convinced that long-term growth trends haven't changed."

Wyndham revenue up 4.5%

Meanwhile, Wyndham's Q2 profit rose 12%, to $128 million, on higher earnings from both its hotel and vacation-ownership operations. Revenue increased 4.5%, to $1.14 billion.

RevPAR at the company's Wyndham Hotel Group, whose brands range from its upscale flagship badge to the Days Inn and Super 8 economy brands, increased 5.2%. Wyndham's midscale Ramada brand reported a 7.9% RevPAR increase, and its Microtel Inns & Suites economy badge improved RevPAR by 10%.

STR: U.S. RevPAR up

Starwood and Wyndham's numbers were echoed by Smith Travel Research (STR), which last week reported that U.S. hotels' Q2 RevPAR rose 7.9% on particularly strong demand in markets such as Oahu, the Hawaiian island that includes Honolulu; the San Francisco Bay Area; and Los Angeles.

U.S. room rates increased 4.7%, to $106.41, while occupancy advanced 3.1 percentage points, to 65.1%, STR said. Such gains more than offset the effect of lagging markets such as Washington and Dallas.

Earlier this month, Marriott said its Q2 net income rose 5.9%, to $143 million, largely on a 6.5% increase in North American RevPAR. Revenue growth between luxury brands such as Ritz-Carlton and select-service brands like Residence Inn was nearly identical.

For hotel and hospitality news, follow Danny King on Twitter @dktravelweekly.

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