Moody's: Hotels Making Comeback

The hotel sector is in comeback mode, according to a report from Moody's Investors Service."After experiencing two years of RevPAR [revenue per available room] declines in 2001 and 2002, and only a minimal gain in 2003, U.S. hotels posted a RevPAR increase of 7.8% in 2004 as urban markets, which experienced the greatest increase in vacancies, are seeing more rooms booked as corporate travel increases with the expansion of the economy," say Moody's analysts EJ Park and Natalka Purij, the authors of the report. The analysts said the outlook for the hotel industry, "barring any further terrorism-related incidents," looks good for 2005 and 2006, with expected RevPAR increases ranging between 5% and 7% each year. In another sign of improvement in the hotel sector, the rating agency is seeing more hotel collateral being included in commercial mortgage-backed securities deals. Moody's has already rated about $1.21 billion of hotel loans so far this year.