Friday, February 13, 2009

Hotels: Wyndham says RevPAR to decline 6% to 10% in 2009

by Calculated Risk on 2/13/2009 04:16:00 PM

Note: RevPAR is revenue per available room.

From Bloomberg: Wyndham Plunges After Announcing New Stock Sale, Quarterly Loss

Revpar, a measure of hotel room rates and occupancy, will drop 6 percent to 10 percent this year, more than 3 percent to 6 percent decline Wyndham forecast in December, [Chief Executive Officer Stephen] Holmes said. The company franchises Super 8, Travelodge and Days Inn hotels.
...
“People trade down to a value purchase as times get tougher,” said Holmes, 52. “Hotel owners need our brands during difficult times even more than they do during good times.”

Hotel revenue fell 3 percent to $170 million in the fourth quarter as Revpar tumbled 9.2 percent. Excluding currency changes, Revpar declined 9.3 percent in the U.S. and 1.6 percent internationally.

“We do not have a heavy concentration of luxury or upper- scale properties in large urban markets where you’re seeing a lot of the more dramatic, double-digit declines in Revpar,” Holmes said.
Look at these key points:

  • Their forecast changed significantly. In December they were forecasting RevPAR to decline 3% to 6% in 2009 - now they are expecting a 6% to 10% decline.

  • RevPAR fell off a cliff in December (9.2% decline).

  • Wyndham offers an inferior good and they believe they are outperforming other hotels.

    Back in November PricewaterhouseCoopers forecast a significant decline in RevPAR in 2009 (see: Forecast: 2009 Hotel Occupancy Rate to be Lowest Since 1971) and based on the Wyndman numbers that was probably too optimistic.