When hotel revenues dive, what happens to NOIs & property prices?
John “Jack” B. Corgel Each week, the hotel industry anxiously awaits the release of the Smith Travel Research room revenue numbers for thousands of U.S. properties. Interest in these reports reached new highs during recent months as the private and public markets continually monitor industry performance during the recession and following the events of September 11. Through the fourth quarter of 2001, room revenues remain well below levels achieved during the same weeks in 2000.(1) The availability of timely revenue information represents a large first step toward understanding how hotel property returns have held up under current economic pressures. Nevertheless, these data may be somewhat misleading about the severity of hotel market softness from a capital market perspective. While the share prices of franchise and management giants in the hotel industry (e.g., Marriott International) vary directly with movements on the top of hotel property income schedules, equity and debt capital
