Hotel revenue per available room declined from 4% to 6 % just during May this year in 10 metropolitan markets tracked by UBS Warburg, the New York-based investment-banking firm. The firm does not survey the South Florida markets, however.
"Because business travel is declining, we believe an increasing number of hotels in the weakest markets are reducing room rates and more aggressively pursuing group and contract business, which is rate competitive," Keith Mills, a UBS Warburg analyst says in a recent market report. "We believe these trends will likely continue into early to mid-2002, putting further pressures on lodging company RevPAR and earnings growth."
On the other hand, RevPar through the first four months this year is up 5.3% over the same period last year in Broward County, up 3.6% in Miami-Dade County and 6.2% in Palm Beach County, according to Smith Travel Research Inc., the Hendersonville, TN-based independent research firm. Occupancy was up 0.8% in Broward over the first four months this year; down 1.1% in Miami-Dade; and up 2.4% in Palm Beach county.
"The figures are fairly close," Miami-based hotel consultant Sheldon Greene tells GlobeSt.com. "If you allow for a margin of error, they're pretty much the same. RevPar is up, which means they've been able to increase the average daily rates."
While this is good news for hotel owners in the South Florida market, the news is not as optimistic for companies like Fort Lauderdale, FL-based Extended Stay, which owns and manages 403 hotels in 38 states and just recently opened its second hotel in Miami; and Innkeepers USA, a Palm Beach, FL-based real estate investment trust that owns 67 hotels in 23 states.
"We know that in Miami-Dade the supply has increased tremendously," Greene says. "Miami continues to grow economically in terms of tourism."
In response to an Innkeepers' announcement earlier this month, UBS Warburg lowered its outlook on the company's funds from operations by 10 cents a share to $1.73 for 2001 and by 12 cents a share to $1.89 for 2002.
Although Extended Stay management recently increased its 2001 earnings estimate to a range of 82 to 87 cents a share, market reports tracked by the financial services firm Thompson/First Call show that a consensus of stock analysts now forecast the company to earn 84 cents a share for the year, down from a prior estimate of 85 cents a share.
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