NEW YORK— USB Warburg estimates that in the largest 25 U.S. markets, RevPAR decreased by a weighted average of 7.3% in July versus a decrease of 9.5% in June. Seven of the largest 25 markets posted double-digit negative RevPAR changes during July. Markets with the greatest decline included San Francisco/San Mateo (-20.1%), Miami (-17.6%), Boston (-13.9%), and Houston (-12.8%). Companies with the highest exposure to these markets, according to USB Warburg, include Innkeepers USA, Starwood Hotels and Resorts, Hilton Hotels Corp. and Host Marriott. Overall in the lodging industry, according to Smith Travel Research (STR), year-over-year U.S. hotel RevPAR declined 2.2% in July versus 5.6% in June. Part of the improvement can be explained by lower supply growth and strong limited-service performance. Hotels in STR’s Midscale w/o F&B chain segment (like Comfort Inn, Hampton Inn and La Quinta) posted RevPAR growth in July, up 1.2%. Hotels in highway locations also reported RevPAR growth in July, up 0.9%. However, upper upscale hotels (like Hilton, Marriott, and Sheraton) posted the greatest RevPAR decline in July, down 5.8%. Urban and airport hotels achieved the lowest June RevPAR growth by location, down 6.6% and 4.1%, respectively. Starwood, Hilton, Host Marriott, and Four Seasons have the greatest exposure to urban and airport locations, said USB Warburg. After increasing 2.4% in 2001, U.S. hotel room supply growth increased 1.8% during July (up 1.7% year-to-date). However, this rate is expected to decline over the next few years due to less debt capital being available for new lodging construction; this should positively impact hotel occupancies. In the largest 25 U.S. hotel markets, USB Warburg estimates that July supply growth increased 1.8% (up 2% year-to-date).
