Tip,
There has been an incredible capacity buildout in the lodging industry over the past 5 years. During the 80s, there simply weren't enough accommodations at the high-end of the market. The baby boomers created an unprecedented demand for upscale lodging in places such as Orlando, Hilton Head, Branson (Mo.), Whistler, Tahoe, Las Vegas, Park City (Ut.), and Vail/Aspen. The major developers have already built in each of these destinations to have presence, and yet major projects are underway in each market, in many cases by developers with extant properties there. Although times are very good for the industry right now, it has become far more dependent on the middle and lower-middle class for growth than in the past. A slowdown in the economy would punish the high-end lodgers greatly. Most of them have a heavy debt load as it stands. Capacity utilization has been declining since last year, and employment within the industry has peaked out as of last August:
economagic.com
The stocks are forecasting recession, but I think that total nights/weeks booked will continue to rise. Revenues should continue to increase in real terms, but not in nominal terms. In other words, deflation:
quote.yahoo.com |
