Barometer of Hotel-Room Revenue Total U.S. Hotel Sales, 1997

A regular service of

Smith Travel Research

The first quarter of 1997 proved to be an excellent period for hotel operators. R o o m revenue was nearly $14.2 billion, an in- crease of 11.5 percent from the same period a year ago, based on the actual results for January and February 1997 and our revised estimate for March. Although room occupancy increased only slightly (0.4 percent) from the first three months of 1996, the average room rate was up 7.4 percent and the number of rooms available for sale rose 3.4 percent.The higher revenue was not obtained without cost, however. In the first quarter of 1997 average daily vacancy rose to 1.36 million rooms, compared to 1.30 million in 1996's first quarter--an increase of nearly 4 percent.

Assuming current trends con- tinue, total room revenue for 1997 will be approximately $61.4 billion, a figure 9 percent above the actual amount re- corded in 1996 and slightly higher than our original 1997 estimate of $60.7 billion. At this writing, however, the effect of the recent increase in interest rates by the Federal Reserve

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(with the threat of more to come) has not been felt in the lodging industry. For 1997 we have predicted a slight decline in the rate of increase in the number of rooms sold (from 2.3 to 2.1 percent) and an increase in the rate of supply growth (from 2.1 to 2.5 percent), resulting in a drop in average daily room occupancy. If the Fed's attempts to curtail (presently imaginary) inflation force the economy into recession--then all bets are off! The new rooms started in 1996 certainly will be completed but the anticipated slight drop in demand could well become a serious slide if companies curtail expenses in anticipation of a period of contraction. All this could make the balance of 1997 quite interesting.--Randell Smith and dohn D. Lesure

Sheraton Is "All Business" in NYC Two of Sheraton's NewYork City hotels are being totally renovated and repositioned as ITT Sheraton's first all-business hotels. Both the Sheraton Russell (formerly the Sheraton Park Avenue) and the Sheraton Manhattan will cater exclusively to business travelers. Business-travel facilities that were once offered on just a few exclusive floors will now be provided throughout the two hotels."Our ' R o o m of the Future' survey identified those factors that business travelers found most important in a hotel room," says Paul O'Neil, president of Sheraton Hotels of NewYork. Together, Sheraton's three

NYC properties provide a range of products, prices, and facilities under common management.

Sheraton Russe l l . Sheraton's Corporate Club R o o m concept has been implemented throughout this property, which just reopened after those renovations. The target market is high-level business travelers.

Sheraton Manhat tan . This property is scheduled to close in late June and reopen in August when it, too, will be en- tirely corporate-club rooms for high-level executives.

Sheraton H o t e l & Towers . The towers provides an ex- clusive "hotel within a hotel" for senior management and VIP travelers while the property's standard rooms can ac- commodate more than 1,000 conference participants.--F. C.

8 EBRNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY