NEW YORK During a conference call held here April 10, Steven Kent, lodging analyst for Goldman Sachs, said that he is short-term bearish on gaming and long-term bullish on lodging.
Discussing the latter, Kent said that he anticipates lodging companies to use their 1Q announcements to lower estimates on 2001 performance levels.
Kent said that while 1Q numbers will likely not be a problem for most lodging companies, the rest of the year will be. “The first quarter may be the best of the year for some,” said Kent. ” I expect some concern and problems for the remaining quarters.”
Kent also discussed using RevPAR as a measure of performance in the industry, stating that it may not be the best quantifier because “there are some inconsistencies among brands,” he said.
“Each brand differs on what they put in or take out of the comp base that is used to determine RevPAR growth,” said Kent. As an example, he cited Starwood, which includes a newly owned property in its comp base as soon as 6 months after it opens; however, Marriott waits one year to 18 months before it includes a newly opened hotel in its comp base, he said.
Kent also said that re-forecasting will reflect only a short-lived earnings slump because “the economy will start to act better in 2002 as the lower interest rates begin to factor into the economy. 2002 will bring a stronger economic environment.” (4/10/01) Shannon McMullen