Ernst and Young Reveals Top U.S. Hospitality Trends

January 29, 2008

Ernst and Young Reveals Top U.S. Hospitality Trends
Jan. 29, 2008 –According to Ernst & Young’s Top 10 Thoughts on the Hospitality Sector in 2008, the credit crunch, a weak U.S. dollar, new construction, green building, globalization and rapidly shifting U.S. demographics are all factors that will shape the U.S. hospitality sector in 2008.

"Conventional wisdom might suggest that the U.S. hospitality sector is likely to suffer if we head into a recession, but the unique fundamentals of the hotel industry over the last few years suggest otherwise," said Michael Fishbin, director of hospitality and leisure practice for Ernst & Young.

"With the financing tap essentially turned off for a few months and underwriting terms changing dramatically, there will be less new construction in the next two to three years than originally planned," said Fishbin. "Essentially, supply will continue to maintain a balance with demand."

Ernst & Young said it expects to see more international investment from major U.S. hotel companies in the near- to mid-term, and this may include new U.S. entrants to the international hotel scene beyond those already operating internationally.

Other trends outlined in the report include:

• Continued growth in the condo hotel/destination club sector as more baby boomers seek second home options in the U.S. and abroad
• An increase in green hotels as construction premiums for green building designs and shortened cost recovery times encourage developers to pursue sustainable properties
• Further emphasis on branding both at the tourist level (by cities and regions) and the property level (by operators) as companies look to gain marketshare — and increase the bottom line — in a much more competitive marketplace.

To view or download a complete version of Ernst & Young’s Top 10 Thoughts on the Hospitality Sector in 2008, visit http://preseason.ntaonline.com/www.ey.com/realestate.