Bullish US Jobs Report Breathes Life Into Hotel Stocks
The Wall Street Journal reports: A better-than-expected monthly jobs report Friday was a much-need piece of good news for the nation's embattled lodging industry.
Hotel stocks rose sharply after the Labor Department reported that U.S. job losses tapered off in July while the unemployment rate surprisingly fell to 9.4%, providing further evidence that the U.S. recession is nearing an end. An improving employment environment could promote more consumer spending, leisure and business travel.
All types of hotels - from budget to luxury - have been cutting costs, including work force reductions, as tumbling occupancy and room rates have left some hotel companies without enough cash to cover expenses. Time-shares, a former industry profit center, are also suffering.
The lodging industry is also the commercial real estate market's most distressed sector, with only $1.2 billion in significant sales in the first half of the year, marking an 85% drop from the same period last year, according to a new report by Real Capital Analytics.
"Although sales of apartments and industrial properties increased from Q1 to Q2 and office sales have recently started to pop, hotel acquisitions continue to slide," the report said.
Underscoring the malaise, the $1.2 billion of volume in the first half of 2009 was a paltry sum compared with the $4.7 billion monthly average in 2006 and 2007, Real Capital's data showed.
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Posted by: Nina Turner