Ernst & Young Survey Finds Major Global Hotel Operators Refocusing Operations, Fortifying...

Ernst & Young Survey Finds Major Global Hotel Operators Refocusing Operations,
Fortifying Cash Positions to Navigate Downturn and Position for Future Growth

NEW YORK, April 7 /PRNewswire/ -- Hotel owners and management companies are
accelerating efforts to fortify cash positions in a bid to survive the current
downturn and to strategically position their businesses for mid-term and
long-term growth, according to a survey by Ernst & Young LLP.

"Many hotel enterprises have identified and continue to identify ways to more
closely manage costs. They are intensifying their focus and practices around
risks and controls, with an objective of emerging from the current downturn
stronger. Those that are effective will remain competitive in the short-term,
and will attract more capital and accelerate their growth in the next
up-cycle," says Michael Fishbin, National Director, Ernst & Young LLP
Hospitality Services Group.

According to the Ernst & Young survey, decreasing guest demand and increasing
attrition of booked business is the greatest anticipated business challenge
cited by hotel executives during the next 12 months of operations. In
response, Fishbin says, companies are refocusing their attention on the guest
experience, such as heightening attention to attract and serve priority
customers and accounts. "Exceptional companies in the hotel sector also
recognize the importance of travel blogs and other web-based resources in
influencing travel decisions, especially among younger generations, and they
continue to look into creative ways to brand the guest experience to generate
demand, such as by implementing green initiatives and social responsibility
programs," he adds.

As of February 2009, three quarters of the respondents indicated that from a
financial perspective, their companies are "performing" (meeting their
budgets). As lodging industry fundamentals deteriorate over the next few
months, Fishbin expects more businesses to feel the stress of decreased
revenues. Only 7% of those surveyed indicated that their businesses were
undergoing restructuring while 11% were "stressed" and 7% were
"underperforming."

"Given the depth of the downturn and the need to provide investors with a
sense of comfort, it is critical that companies that own and operate hotels
regularly stress-test their hotel property portfolios to ensure they can
proactively consider the impact of varying economic scenarios and assess
strategic alternatives," Fishbin says.

This is particularly important in light of the fact that respondents were
quite pessimistic about the outlook for revenue per available room (RevPAR)
growth in 2009. (RevPAR is a key ratio used to measure financial performance
among hotel businesses.) Eighty-five percent of those polled expect negative
RevPAR growth for the year.

The survey of global hotel enterprises, varying in size from less than US$150
million to more than US$600 million in revenues, was conducted between
December 2008 and February 2009. Key findings include:

Cost management
-- All of the businesses surveyed currently employ labor management
techniques such as, hiring freezes, layoffs and reductions in paid
working hours as a primary cost management strategy, indicating that
employment in the hospitality sector is likely to be affected.

Capital strategies
-- Thirty-three percent of respondents indicated that they plan to raise
fresh capital in 2009 with a further 38% planning to seek capital in
2010-2012.
-- During the economic downturn, more than two thirds of respondents also
expect to enter into joint ventures or alliances with other
hospitality
and capital enterprises to strengthen their businesses.
-- Less than 10% of respondents expect to restructure their balance
sheets.

Business challenges
-- Fifty-six percent of respondents view decreasing average daily room
rate
(ADR) as the second greatest challenge to hotel sector businesses
behind
decreasing demand (82%) and ahead of increasing transportation
costs/declining airline capacity (37%). Other challenges include
climbing labor costs, lack of financing and increasing competition.

Green initiatives
-- The vast majority of respondents currently implement recycling
programs
in their hotels (81%) and use energy saving technology (88%) and, for
the most part, those that do not intend to implement recycling and
energy savings next year.
-- Education and social responsibility programs are also gaining in
popularity with 68% of respondents currently operating such programs.
An
additional 20% plan to implement such programs within the next 12
months.

Survey results from Exceptional Enterprises in the Hospitality Sector are
available online at www.ey.com/realestate.

About Ernst & Young's Global Real Estate Center
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requirements and financial risks, whilst meeting the challenges of expanding
globally and achieving sustainable growth. Ernst & Young's Global Real Estate
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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.

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For more information, please visit www.ey.com.

Ernst & Young refers to the global organization of member firms of Ernst &
Young Global Limited, each of which is a separate legal entity. This news
release has been issued by Ernst & Young LLP, a U.S. client-serving member
firm of Ernst & Young Global Limited.

SOURCE Ernst & Young

Andrew Neilly of Gallen Neilly & Associates, +1-925-930-9848,
andrew@gallen.com, for Ernst & Young