Full-Service Sector Is Enjoying RevPAR Growth, Building More

NEW YORK— Despite developers having to spend more to deliver more, full-service brand franchisors are enjoying a steady stream of new and converted properties coming online. Bobby Bowers, vp, Smith Travel Research (STR), said the segments that compose full service have “done relatively well in terms of RevPAR growth.” (STR defines full-service properties as those that are upper-upscale, upscale and midscale with food and beverage.) For example, for the 12 months ending Sept. 30 (the latest figures available), upper upscale RevPAR growth climbed 7.1%, leading all of the segments; upscale rose 3.8%; and midscale with f&b rose 4.3%. Bowers compared this with limited service group RevPAR growth: midscale without f&b rose 3.8% and economy rose 3%. Bowers expected upper upscale to continue leading RevPAR growth in the short term since there hasn’t been significant room supply growth in the category. “Those [properties]tend to be in markets like New York, San Francisco, Los Angeles and San Jose where they’re just having huge RevPAR growth. [They’re] going to have the fundamentals in their favor, at least for the short term,” said Bowers. He noted if the economy slows, “as I think the Fed would like it to, you’re going to have to believe that room demand is probably going to drop off a little bit because the real GDP for next year is a little bit slower. We all have to keep in mind that’s possible.” Higher building costs and more difficult financing will also give “a lot of the development community a wait-and-see approach,” he added. Brian Ebbs, vp/brand manager, Choice Hotels International’s Clarion brand, said 22 properties opened in 2000, with 50% of them in the U.S. representing 1,617 rooms. Internationally, Clarion opened three hotels in Australia and Ireland; and single properties in Denmark, Canada, Indonesia, Norway and the Peoples Republic of China, all totaling 1,695 rooms. Domestically, Ebbs said Choice is seeking to grow the brand in the top 83 markets, and “trying to be the best full-service hotel in secondary markets and competitive in major markets… We do have certain identifiers as we go into those markets: 125 rooms, interior corridors, five stories, 5,000 square feet of meeting space and other identifiers so the consumer is aware of what Clarion is, regardless of [location].” He noted that conversion encompasses 90% to 95% of domestic development. In 2001, 17 Clarions will open internationally and 12 domestically. Ebbs sees potential in gateway cities in Asia/Pacific and Europe, and “a lot of new construction in South America.” Peter Blyth, evp/development, Radisson Hotels & Resorts, said the brand expects to end 2000 with 30 more U.S. properties and 20 internationally, with an “emphasis for this last quarter is on Asia,” giving it 440 open. As for 2001, parent Carlson Hospitality Worldwide has a mandate of 15% growth year-on-year, noted Blyth, “and that’s in units, top line and bottom line [revenues and profits].” The executive vp said Radisson is concentrating on North America, using purchasing power gained from its recent alliance with Olympus Capital Partners to buy lodging real estate in strategic cities and resorts. “Because we now have the cash, we can go forward and acquire hotels with alacrity,” he said, noting there are also opportunities in Mexico. “Because of… real estate ownership [changes]in Mexico, there’s a lot of buying and selling going on,” said Blyth. “We believe 2001 provides us with an opportunity to grow significantly there— a quarter of the growth may actually be Mexico.” In Asia Radisson is adding development sales staff in Beijing to take advantage of recent strides in China-U.S. trade relations. “There’s a great deal of real estate speculation going on in China now because everybody anticipates a boom, and therefore a boom in hotels,” said Blyth. Radisson has four hotels in China, and expects that number to double by year-end 2001. Radisson also opened its first hotel i