June 13, 2002 - The U.S. lodging industry will record aggregate profits of $17.2 billion this year, up from $16.7 billion in 2001, as a result of cost reductions initiated in 2001. Revenues will increase from $108.7 billion in 2001 to $109.7 billion in 2002.
    
This increase in profits reflects aggressive cost controls and expense reductions that have been continued and "fine-tuned" from last year. Without these actions, profits would have decreased by 7.8 percent to $15.4 billion in 2002.
    
PricewaterhouseCoopers research indicates that the following measures are examples of actions taken by the lodging industry to reduce costs:

1. Eliminating selected job positions
2. Reductions in hours employees work
3. Reductions of expenses on advertising, renovations, maintenance and bonuses
4. Reductions in the number of restaurants open and/or reduction in hours of operation of restaurants and room service
5. Change of food service from waiter to buffet, more limited menus and eliminating high food cost items
6. Reduction of hours of others services, including bell staff, doormen, concierge and spa
7. Postponement of training programs
8. Reduction in amenities, such as the number of selections of soaps, complimentary bottles of water,
9. Employee teams to identify cost savings
10. Reduced decorations (lobby flowers, candles in restaurants, elimination of use of linens for some meal periods)
11. Pay reductions and deferring or skipping regularly scheduled salary adjustments

In 2000, PricewaterhouseCoopers had forecasted that industry profits would decline in 2001 for the first time since 1991, reflecting anticipated RevPAR (Revenue Per Available Room) declines which did materialize in March and April 2001. Profits declined by 27.4 percent from $23 billion in 2000 to $16.7 billion in 2001, as RevPAR declines became more severe in the last four months of 2001.

Lodging industry profits are expected to increase to $19.8 billion in 2003.

PricewaterhouseCoopers is the leader in econometric modeling and providing reliable U.S. lodging industry forecasts that offer true industry-wide samples based on proven econometric models. The group predicted every industry turning point in the last ten years, usually two years in advance of each market move.

PricewaterhouseCoopers Hospitality and Leisure Group provides services including management, technology, human resources and financial consulting in North America, Europe, the Middle East, Africa and Asia Pacific. The group has a partnership with Smith Travel Research.

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