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Based on data in STR's 1997 Hotel Operating Statistics (HOST) Study, in 1996 the industry enjoyed the strongest Average Daily Rate (ADR) growth in over 15 years. That ADR improvement, coupled with a modest increase in occupancy (65.1 percent to 65.2 percent in 1996) caused revenue per available room (RevPAR) to grow 6.2 percent over the previous year. "This increase in revenue was twice the inflation rate and the highest annual RevPAR increase since STR began tracking the lodging industry in 1987" observes Randy Smith, STR's Chief Executive
Officer. "As has been the case every year since 1991, when the industry entered the current recovery cycle, every key measure of lodging industry performance has improved over the last year".

According to the 1997 HOST Study, both full-service properties (those with food & beveragerevenues) and limited-service properties (those without food & beverage revenues) have reported increases in Gross Operating Profit (GOP) measured as a Ratio to Sales (RTS) since 1990. In addition, both service segments have also experienced a substantial decline in fixed charges, again measured as a Ratio to Sales, over the same time period. Fixed charges include property taxes, property insurance, rent, interest, depreciation & amortization and equipment leases. In fact,  in 1996 both types of facilities reported the highest GOP since STR began tracking the industry's  financial performance in 1990 (see attached Chart C & Chart D). Also noteworthy in 1996, both segments reported the lowest ratio of fixed charges to total revenue over the period.

"For full-service properties, the increases were particularly dramatic as improvements in GOP coupled with declines in fixed charges resulted in pre-tax income of 15.7 percent, a 63 percent rise over 1995. While part of the profitability improvement in full-service hotels is certainly due to enhanced operating efficiency, a significant portion is also due to increased levels of revenue and the sources of that revenue", explains Smith. "A similar, but less dramatic situation occurred in limited-service properties last year. ADR increases over 1995 were not quite as strong as those reported by full-service hotels, therefore, the reported increases in GOP and pre-tax income, while
still significant, were not quite at the levels as their full-service counterparts."

In addition to the comprehensive financial data contained in the annual HOST Study, this year's edition contains a special analysis of supply trends (i.e.; new construction, hotel expansions, conversions and closings) by STR's various Chain Scale segments as well as Independent hotels. According to Smith "The recent history of the U.S. lodging industry has been one of constant evolution. With the current environment providing fertile ground for change, there is every reason to expect that the evolutionary process will continue into the next millenium. Furthermore, if the U.S. economy remains strong, we believe that the U.S. lodging industry, and most of its players, will continue to prosper the next few years, as they have so far in the 1990s. The results of the current evolution may only determine the magnitude of the industry's success."

The HOST Study is based on data assembled and compiled solely by STR. The 1997 edition, reporting on results for calendar year 1996, contains data on revenues and expenses for nearly 3,000 hotels, the largest sampling of financial data ever published on the U.S. lodging industry. Data is presented for full-service and limited-service hotels by region, size, price and location categories. The 1997 HOST Study is available now.

Smith Travel Research is the leader in lodging industry tracking and analysis and provides regular industry reporting to all major U.S. chains, many independent hotels, and a variety of management companies and hotel owners. The company also tracks lodging industry performance  in Canada and Mexico.