Ernst & Young News
Weak Dollar Likely to Benefit US Hotel Markets in 2008
NEW YORK,
"The continued weakness of the dollar is producing multiple beneficial effects on the US hotel market which is likely to continue for the foreseeable future and which may pull the sector through current recessionary pressures," said Michael Fishbin, Ernst & Young's US Director, Hospitality & Leisure.
Today, international tourists are looking to the US as a prime vacation spot and are spending more money, often upgrading to higher-end and even luxury accommodations because their local currency now buys, in some cases, more than twice what it did just a few years ago. Total arrivals in the US have witnessed 18 months of successive growth since
Fishbin pointed to a parity between the US and Canadian dollars, which has increased Canadian spending power south of the border, and to the euro, which has strengthened from one euro per dollar to
"As long as this exchange rate bonus exists for non-US travelers, the benefits will be seen at hotels from ski resorts in Vail and Aspen to cruise ports such as
Second, US consumers are staying closer to home, and if they take vacations, they are more likely to travel within one of the 50 states.
Third, the pipeline of new construction hit its peak in the fourth quarter of 2007, and with the economic slowdown and far tighter credit, some hotel construction projects have slowed while others have been shelved. A supply-demand imbalance is likely to benefit existing hotels and could result in higher room rates in cities such as New York,
"Last year, the hotel sector in this country showed solid gains in occupancy and average daily room rates (ADR)," said Fishbin. "Looking forward, we see the continuation of a prolonged upward cycle that began two years ago."
The report also highlights the continued influx of foreign capital into the sector as a result of cash-rich international investors such as private equity, high net worth individuals and even sovereign funds, which are probing markets across the country looking for hotels to purchase.
Now in its fourteenth year, Ernst & Young's 2008 US Lodging Report contains detailed analysis of the six main lodging sectors: luxury, upper upscale, upscale, midscale with food and beverage, midscale without food and beverage, and economy, as well as observations on 10 key trends facing the industry. In addition, the report includes detailed analysis and commentary on the hotel sectors in the 16 largest US hospitality markets:
For a full copy of the report visit www.ey.com/realestate.
About The Ernst & Young Global Real Estate Center
Ernst & Young has the largest integrated real estate practice of any accounting organization, with 5,000 professionals around the world providing audit, tax, and transaction advisory services to real estate owners, investors, lenders, and users — including many REITs, homebuilders, and developers. Our approach combines entrepreneurial thinking and a working knowledge of real estate issues with broad real estate experience, vast resources, and a diverse network of clients and contacts. Ernst & Young serves more than 4,000 real estate clients throughout the world. For more about Ernst & Young's Global Real Estate Center log on to www.ey.com/realestate.
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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
This press release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
SOURCE Ernst & Young
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