Associated Press

Hotel shares lack direction in light trading

Associated Press, 12.24.08, 02:15 PM EST

Shares of hotel companies lacked direction on a day of light holiday trading Wednesday, after a research firm reported that U.S. hotel occupancy dropped sharply in November, although demand got a boost heading in the Hanukkah and Christmas holidays.

Smith Travel Research, a provider of hotel industry data, reported Wednesday that hotel occupancy dropped 10.6 percent in November to finish the month at 51.9 percent.

Meanwhile, average daily rate dipped 2.5 percent to $101.81 as hotel companies continued to lower room prices to fill empty beds. November marks the second consecutive month of declining average daily rate, or ADR. Before the streak was broken in October, ADR had gained for 63 consecutive months since 2003.

Due to falling demand and prices, the industry's revenue per available room dropped 12.9 percent in November to $52.86. Revenue per available room, or revpar, is a key gauge of a hotelier's performance.

In October, the industry's revpar was down 7 percent.

Luxury hotels been the hardest hit as consumers and businesses trade down to less expensive properties. In November, luxury hotel occupancy was down 15 percent, while the average daily rate fell 6.6 percent to $164.83.

In a separate report released on Wednesday, STR noted that hotels got a reprieve from the downward pressure last week, as the Hanukkah and Christmas holidays helped boost occupancy, ADR and revpar.

For the week ended Dec. 20, occupancy rose 2 percent to 42.9 percent and ADR gained less than 1 percent to $92.44. Revpar for the week increased 2.6 percent.

"While the outlook for the first six months of 2009 is not favorable, we still remain optimistic that performance will pick up in the second half of the year," said STR Vice President Brad Garner in a statement.

In a holiday-shortened session, shares of Marriott International Inc. closed 9 cents higher to $18.31, while shares of Starwood Hotels & Resorts Worldwide Inc. rose 3 cents to $16.92. Shares of Intercontinental Hotels Group PLC fell 20 cents, or 2.4 percent, to $8.22.

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