Lodging Industry Profits To Reach $17.2B: PwC

NEW YORK— The U.S. lodging industry will record aggregate profits of $17.2 billion this year, up from $16.7 billion in 2001, as a result of cost reductions initiated in 2001, PricewaterhouseCoopers reported. Revenues will increase from $108.7 billion in 2001 to $109.7 billion in 2002. This increase in profits reflects aggressive cost controls and expense reductions that have continued since last year. Without these actions, PwC said profits would have decreased by 7.8% to $15.4 billion in 2002. PricewaterhouseCoopers research indicates that the following measures taken by the lodging industry contributed to cost reductions: eliminating selected job positions; reducing employee hours; reducing advertising, renovation, and maintenance expenses; reducing restaurant hours, changing food service from waiter to buffet, and eliminating high food cost items; postponing training programs; reducing amenities and decorations; and initiating salary freezes. However, Bjorn Hanson, Ph.D., global industry leader at PcW’s hospitality & leisure practice, noted, “Some of these cost reductions seem to be institutionalized, and some can only continue for a limited time or they will affect the quality of facilities and guest service.” Lodging industry profits are expected to increase to $19.8 billion in 2003.