Figures revealing a summer slowdown on both sides of the Atlantic were released this week, confirming that leisure business has been the first to be impacted by economic slowdown.
InterContinental said that Holiday Inn suffered a 1.4% decline in revpar during August in the Americas and TRI Hospitality found that its sample of mostly three- and four-star chain hotels in the UK showed a 2.4% decline outside of London.
For the first eight months of this year, the revpar trend is still positive for Holiday Inn with a 0.5% increase. Likewise for UK provincial hotels in TRI's HotStats survey there is an increase of 0.9%.
The TRI numbers also look at profitability, however, and the year-to-date figures for income before fixed charges, an operating profit proxy, show a decline of 3.2% on a per available room basis.
Holding up better, however, was London with a 6.8% rise in profitability for the eight months and a 7.1% increase in revpar.
Last week, American Express added to the gloom with its Business Travel Monitor for the EMEA region. It found that average rates were at best stabilising and in many places decreasing.
It said the effects of the downturn in the financial sector hit cities like London, Frankfurt, Edinburgh, Geneva and Paris which also saw decreases in average rate. London was down 7.7% in Q2 after showing a slight increase in Q1.
This week also saw the US part of PKF forecast in that country a two-year contraction in demand for hotels.
"Because of the extended slowdown of the US economy, compounded by the negative consequences stemming from airline capacity cutbacks, we are now forecasting a 0.2% decline in lodging demand in 2008 followed by another loss of 1.1% in 2009," said Mark Woodworth, president of PKF Hospitality Research.
PKF also stated that most US hotels can withstand a fairly substantial decline in net operating income and still have the ability to meet their debt service obligations.
Developers, however, are hurting and PKF predicts that for 2010 and 2011 the pace of hotel openings will be limited (this lag is caused by the 12 to 24 month period it takes to build hotels).
In the meantime, companies like InterContinental are remaining bullish about the pace of openings. In the Americas, it announced the opening of three properties under the flag of its eponymous luxury brand this month in the space of 10 days. The brand currently has a global pipeline of 67 hotels with 21,284 rooms. There are 154 hotels currently in the portfolio with 52,428 rooms.
Separately, IHG said this week it had entered the timeshare market (it managed, mercifully, to avoid the term ‘vacation ownership').
The company has formed a strategic alliance with The Family of Orange Lake Resorts in Florida which is the largest single site timeshare resort in the world. Orange Lake is owned by the Wilson family, relations of Kemmons Wilson, the founder of Holiday Inn.
The revenue share to be taken by IHG through its marketing relationship is about 5% which will be about $4m from 2010.
The marketing agreement includes the building of a Holiday Inn Resort on the site; the marketing and rental of the timeshare villas through IHG's reservation system; and the formation of the Holiday Inn Club Vacations exchange programme which will allow timeshare weeks to be swapped for nights at IHG hotels.