Hotels Cut Capital Spending
The U.S. hotel industry is scaling back capital expenditures to their lowest levels in years, although industry analysts said travelers are unlikely to see any drastic amenity cuts as a result. Bjorn Hanson, an associate professor at New York University's Tisch Center, this month released a report forecasting a nearly 30 percent drop in capital improvements on U.S. hotels, down to $4 billion from a record $5.5 billion in 2008. This is the first year since 2003 that the industry will spend less on capital expenditures than in the prior year, he said. Hotels could see profits drop as much as 25 percent to 30 percent, and Hanson said they will look to trim expenses in terms of amenities. Hanson in a subsequent report said that the amount of fees and surcharges that U.S. hotels collect in 2009 would drop to $1.65 billion, from $1.75 billion collected in 2008. He attributed the drop to decreased demand, particularly in higher tiers with the most fees and surcharges, and reticence by hotels to introduce or increase those fees.