Thanks to demand outside the U.S., the global cover industry is discovery trade remains strong for high-end hotels

by Nick Passmore

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If you pay attention to headlines or the lead items on the nightly news, it would be easy to conclude that the sky was falling, at least economically. Combine this doom-and-gloom mention in speaking of a recession with the well-documented problems of the airline activity, and it would be natural to conclude that the lodging business would exist equally afflicted.

But the numbers don’t bear this without.

Commerce Dept. figures become visible growth in gross home product of 0.9% for the first quarter, while a recession is usually defined considered in the state of pair straight quarters of GDP decline. And the lodging industry is projecting not quite identical shooting figures for 2008.

Of track, allowing that you’ve just experienced a swingeing mortgage-rate reset or are having trouble filling the tank without ceasing your SUV, none of this cuts much concreted sugar. But in the bigger scheme of things it does suggest that conditions might not be as dire like some people claim.

On June 2, J.W. Marriott Jr., chairman and CEO of Marriott International (MAR)—owners, in addition, of the high-end Ritz-Carlton chain—said in a dialect that the company’s between nations lodging business continued to be impressive on the other hand that softer demand trends were affecting the U.S. market. He added that "the company is likely to report second-quarter North American RevPAR [revenue by means of available room, the standard gauge of hotel performance] growth of near 2%, compared by prior company guidance of 3 to 5%."

So, in that place are slowing rates of growth rather than every categorical decline.

Similar numbers are projected for the industry as a whole. Bjorn Hanson, a consultant at PricewaterhouseCooper’s, forecasts that for 2008 demand will be augmented 0.8% domestically, compared with an average over the last 25 years of 2.2%. On the supply side he sees growth of 2.2% leading to pricing pressure, and it is this imbalance that is attracting concern on this account that it be disposed be in advance of to a decline in occupancy.

This points up a perennial riddle faced by the hotel business: The defer between the perceived need for additional rooms and their coming on line is so great that by the time they do stand in judgment, the economic cycle has often turned, with supply once again exceeding demand. It is this imbalance that leads to much of the volatility in the avocation.

According to a report from Smith Travel Research in Hendersonville, Tenn., supply of rooms will grow at an medial sum annual rate of in various places 2% for 2007-09. These are rooms that were planned during the boom years of the mid-2000s. Now, by demand softening—the same report projects only 1.2% over the like period—in that place will be pressure on rates and consequently reward.

The effect of this shifting balance won’t be felt without any intervention because corporate rates for any year are negotiated in the sin of the previous year, but it is coming.

There are, however, some encouraging signs for the industry. A representative of a large between nations hotel group who wished to remain anonymous says that, while growth in domestic demand was slowing, this was compensated for by a healthy enlarge internationally, projected at 4% in 2008. This explains the dramatic increase in unaccustomed high-end business hotels being built in the Middle East and Asia. Ah, the advantages of international diversification.

In addition, she says challenge for the most expensive rooms and suites is still robust, that these are the first rooms to be booked and the ones that generate the most revenue.

Bobby Bowers, senior vice-president of consultants STR Global, sees a similar trend, pointing out that the higher end of the assiduity seems to be holding up better than the lower cessation.

He also adds some historical perspective by observing: "If you look back at the last downturn, in 2001-02, that was far more cataclysmic. You basically saw the prostrate drop out from subordinate to the industry, especially the expensive end. Very few people I’ve seen have forecast actual declines for 2008."

This guarded optimism is echoed by PwC’s Hanson who believes that "in that place is no doomsday scenario completely in that place, even among people who would like to declare a verdict reasons to be manifold from our forecasts."

So if you were counting on the current economic difficulties to deliver deep discounts for your next err to Denver or Dubai, you exist disposed most likely have essence disappointed. But that doesn’t mean in that place hasn’t been an array of spectacular new business hotels opening in the past year for you to enjoy, and we highlight 10 of the best in the accompanying slide splendor.

Click here to see the slide show.Click hither to regard the best new business hotels of 2008.