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Hospitality Sector Recovery Set to Continue in 2012,
Despite Ongoing Global Economic Uncertainty

According to Global Hospitality Insights Report Released by Ernst & Young


NEW YORK and LONDON, 23 January 2012 - Hospitality market fundamentals look set to continue the recovery which started in 2011 in spite of continuing uncertainty and the prospect of further upheaval in the global and regional economies according to Ernst & Young’s latest Global Hospitality Insights report published today.  
 
Despite the uncertain global economic environment, hospitality indicators continue to appear positive. “The conventional wisdom suggests that key fundamentals should be on the wane, but that has not happened yet and, due to many factors, we don’t believe it will occur in 2012,” said Michael Fishbin, Ernst & Young’s leader of Global Hospitality Services. Nevertheless, Fishbin suggests hotel operators and investors in the sector need to stay focused and not have a false sense of security by the overall numbers.
 
“The situation for the hotel industry is markedly different from market to market and global operators need to be on their toes and ready to react to rapidly changing conditions,” he added.
 
Fishbin contrasted hospitality markets in developed economies, such as the US, with some developing economies such as China and Brazil, where construction has been very active. In the US, currently the largest hotel market in the world, the construction of new hotels has historically averaged around two percent per year but in recent years, and for the foreseeable future, is projected to be less than one percent per year. “Even with the uncertain economic outlook, hotel supply is not going to outpace demand any time soon, giving fundamentals such as room rates and overall occupancy a chance to further recover,” Fishbin said. 
 
Among emerging economies, Brazil could fare the best over the next decade in part by the impact of two mega events – the FIFA Soccer World Cup and the Summer Olympics – scheduled to take place there in 2014 and 2016, respectively. These events will attract millions of travelers to the country and while hotel construction has been increasing in preparation for both events, officials are taking a pragmatic approach in order to avoid overbuilding.
 
Fishbin concludes that while the bias among hotel companies will be to continue to grow in 2012, that growth should not come without a fair amount of checking back in the rear view mirror. “This isn’t a time for hotel operators to abandon the principles that allowed them to navigate through the recent economic downturn,” he says. Many companies are still sitting on piles of cash waiting for an opportunity to transact, says Fishbin. “Companies should take advantage of this breathing room to reassess and examine their capital agendas to make sure they are using cash wisely and efficiently as well as preparing for future growth,” he says.

Full Report:  http://gallen.com/releases/EYReport2012_01.pdf

About Ernst & Young’s Global Real Estate Center
Today’s real estate industry must adopt new approaches to address regulatory requirements and financial risks, whilst meeting the challenges of expanding globally and achieving sustainable growth. Ernst & Young’s Global Real Estate Center brings together a worldwide team of professionals to help you achieve your potential — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference.

For more on Global Hospitality Insights Top Thoughts, go to www.ey.com/realestate.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
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Contact:

Andrew Neilly
Gallen Neilly & Co
+1 925 930 9848
andrew@gallen.com

Bijal Tanna
Ernst & Young Global media relations
+44 (0)20 7951 8837
btanna@uk.ey.com


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Also See: Hospitality and Real Estate CEO's Optimistic About Economic Recovery with Nearly Half Focused on Either Raising or Investing Capital According to Survey Released by Ernst & Young / July 2011

Ernst & Young Releases Report on Global Infrastructure: Trillions of Dollars Spent Rebuilding and Expanding Around the World, but not in U.S., Which Seriously Pales by Comparison / May 2011

New Ernst & Young Report Indicates 2011 will see Reawakening of Hospitality Sector; Emerging markets set to propel global hospitality growth / January 2011


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