• US close to peak

According to a study from a US office of consultancy PKF, the hotel industry may be nearer to the peak of this cycle than the beginning.

In the world of cautious business-speak, this is close to calling the turn, although PKF hedged its bets by stating that current optimism is justified by solid industry fundamentals.

The consultancy did admit that there is currently peak-of-the-cycle behaviour, with purchase and lending criteria that are equal to or more liberal than those used to purchase properties during the early stages of the 1990s growth cycle.

Yields are at historic lows and debt coverage ratios continue to favour borrowers, added PKF. \These terms indicate that lenders feel adequately protected from a recurrence of delinquency and default risk experienced in 2002 and 2003,\ it said in the Hospitality Investment Survey 2006.

Meanwhile, Smith Travel Research reckons that the US hotel industry had its most profitable year ever, generating $122.7bn in revenues and $22.6bn in profits. The previous profitability peak was in 2000 when it was $22.5bn, although in inflation adjusted terms the year 2000 is still ahead.

STR said that with a 1.2% increase in supply expected this year, against a historical norm of 2.1% and demand expected to grow by 3.1%, the US hotel sector was likely to be \great through 08\.

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