New Years Eve May Not be Much of a Celebration for the Hotel Industry--according to Bear Stearns
NEW YORK / December 3, 1999--Despite unparalleled hype and enthusiasm for New Years Eve 1999, hotels may not cash in according to Bear Stearns senior managing director and lodging analyst, Jason Ader. With the exception of hotels in hot spots such as Las Vegas and New York City, Ader believes that most hotels will not reach expectation levels they had set for the holiday weekend.
Sluggish Bookings: Ader's research into the hotel industry has found that many facilities are not fully booked for New Years Eve and that some have resorted to offering discounts. Ader believes the situation has been hindered by a number of factors, including:
- Fear of high prices
- Y2K concerns about traveling
- High airline prices
- Desire by many people to stay at home
"It doesn't seem as if there is an overwhelming desire by the masses to celebrate the coming of the new century in a big way," says Ader. "It seems most people want to forgo high prices and Y2K concerns and are content to celebrate at home."
Time to Bargain Shop: What is bad news for lodging companies is turning out to be good news for consumers. Because many rooms remain unsold consumers can now find surprisingly good deals on hotel rooms. "Companies are beginning to hit the panic button so that they aren't left with many empty rooms on what has been billed as the biggest night of the century," says Ader. The lodging analyst suggests calling around and using the Internet are two good ways to find last minute deals that hotels are trying to push.
Still Profitable: Even though it appears expectations will not be met for many in the lodging industry Ader expects the New Years' weekend will still be profitable. Most hotels only need to fill approximately 55% of their rooms to turn a profit and Ader is confident that will be accomplished. "Most hotels will do OK, they will probably even top last New Years numbers, but in the end it won't be the windfall they had been hoping for."
Jason Ader is a senior managing director responsible for equity research coverage of the Gaming, Lodging and Leisure industries. His division covers a universe of over 100 public companies. According to Institutional Investor, Mr. Ader is the only leading analyst to be ranked in both gaming and lodging and has been a member of that publication's "All-America Research Team" for the past five years. In 1998, Crains New York Business named Mr. Ader one of the top 40 people under 40 years of age in New York. To speak with Jason contact Russell Sherman (212-272-5219) or Christina Conde (212-272-4257).
Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc.
Any recommendation contained in this report may not be suitable for all investors. Moreover, although the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. Bear Stearns may make markets and effect transactions, including transactions contrary to any recommendations herein, or have positions in the securities mentioned herein (or options with respect thereto) and may also have performed investment banking services for the issuers of such securities. In addition, employees of Bear Stearns may have positions and effect transactions in the securities or options of the issuers mentioned herein and may serve as directors of such issuers. Copyright (c) 1999. All rights reserved by Bear, Stearns & Co. Inc.