“Hotels' recovery is spotty”

Posted: 07 Aug 2010 12:12 AM PDT

LOS ANGELES – Sluggish hotel demand outside the largest U.S. cities is slowing an industrywide rebound even as an influx of leisure, business and international travelers spurs growth in metropolitan areas such as New York City.

Occupancies at hotels in small towns and near highways were little changed at 49 percent in the first six months of 2010, according to data from Smith Travel Research.

They climbed to 65 percent from 61 percent from a year earlier in large cities including New York, Chicago and Washington.

Lodging demand in smaller markets has been slower to recover as the job market remains weak. While rising travel to urban areas boosted earnings at hotel owners including Marriott International and Wyndham Worldwide, companies might not be able to raise rates nationwide until the second half of 2011, according to Jan Freitag, vice president at Smith Travel.

"New York City is skewing the numbers," said David Loeb, an analyst at Robert W. Baird Co. in Milwaukee. "Urban and suburban markets are doing the best while the others are recovering more slowly."

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