Carlson says hotel rates to recover

Hubert Joly, President and Chief Executive Officer of Carlson, speaks during the 2010 Reuters Travel and Leisure Summit in New York February 23, 2010.

NEW YORK (Reuters) - Hotel room rates may jump back to pre-crisis levels sometime during 2012 to 2013 as companies start to ramp up their travel budgets, the head of private travel and hospitality company Carlson said on Tuesday.

"Fundamentally, in order to grow businesses you need to travel, you need face-to-face contact," Carlson Chief Executive Hubert Joly said at the Reuters Travel and Leisure Summit.

Companies pared back their travel spending last year as global economic activity slowed and unemployment grew. Hotel room rates tumbled nearly 9 percent in 2009, the worst year for the hotel industry since the Great Depression.

The downturn has forced some firms to make permanent changes in the way they book travel, Joly said. But other companies are likely to revert to previous levels of spending.

"Try investment bankers and tell them on a permanent basis that they're going to be in the back of the plane -- they're not going to do deals," Joly told reporters.

Joly's comments echo sentiments from another hotel operator this week.

Starwood Hotels & Resorts Chief Financial Officer (HOT.N) Vasant Prabhu noted that as the economic outlook improves, it is likely that companies will loosen some of their more onerous restrictions on travel spending.

"Sometimes these restrictions are often not in the best interests of their business either, so they have to start loosening up things," Prabhu told Reuters on Monday at the summit.

"The name of the game in 2010 is grow your top line," Prabhu added.

Changes in room rates at luxury and upscale properties often have a trickle-down impact on economy and midscale brands, said Wyndham Worldwide Corp (WYN.N) Chief Executive Stephen Holmes at the summit.

Carlson, the ninth-largest hotel operator in the world, expects to boost the number of hotels 50 percent over the next five years, Joly said. The bulk of the company's pipeline is outside North America.

The company is also in the midst of revamping its Radisson chain. More than 400 of its 1,059 properties worldwide belong to this chain.

Radisson is about one-third of the company's portfolio in the United States, Joly said. Unlike Radissons outside the country, the brand is less upscale.

Over the next five years, Carlson plans to invest $1 billion in overhauling and marketing Radisson properties, a process that will mean some hotels will have to leave the system.

"As a result of the relaunch of this brand, we expect RevPAR to go up significantly," Joly said, referring to revenue per available room, a measure of hotel industry performance that takes into account room rates and occupancy.

(Reporting by Deepa Seetharaman; additional reporting by Ruben Ramirez; Editing by Phil Berlowitz)