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Lowers Ratings for 6 Lodging Stocks |
| New York, New York - Dec. 4, 2000 - Bear Stearns
Senior Managing Director and Lodging Analyst Jason Ader, in response to
growing weakness in the US economy, downgraded the lodging sector today.
Citing a clear correlation between the economy and the lodging industry,
Ader lowered his rating on six prominent lodging stocks. �There seems to
be little doubt that the economy is slowing,� said Ader. �And history has
shown that when the economy suffers, so do hotels.� While Ader notes that
an economic slowdown has already been incorporated into some of the stock
prices, he believes the downturn could be worse than anticipated. In addition,
further speculation that the risk of a recession is increasing will further
depress the sector. �Slowing economic trends could be enough to instill
fear into investors and drive multiples lower,� concluded Ader.
The Bear Stearns analyst downgraded the following stocks:
In January, when Ader upgraded the lodging sector, he cautioned investors that the call may be a bit premature and, in fact, it was, as stocks drifted downward for a period before rising. In the end, however, investors enjoyed a healthy increase in the sector; large-cap lodging stocks are up more than 25% year to date. This time the results could be similar. �We believe this call may also be a bit early, but we believe in this situation it is much better to be the first one to react to a downturn than the last,� commented Ader. Not a Total Disaster While a continued deterioration in the economic sector has brought about pessimism, the Bear Stearns analyst is by no means predicting a cataclysmic downturn in the lodging industry. In fact, the analyst believes the industry is better positioned to weather a downturn than it was during the last major economic slowdown in the early 1990s. �Investors shouldn�t lose faith in the lodging industry,� said Ader. �There are a number of strong companies that will thrive in good economic times. It�s just that this is probably a good time to take a breather.�
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Bear, Stearns & Co. Inc., New York Media Contact: Russell Sherman, 212/272-5219 [email protected] |
| Also See | Is There Trouble Ahead for Travel Agents? Will the Majority of Travel Websites Fail? Can Hotels and Airlines Profit from the Web? / April 2000 |
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