Report says future of hospitality industry looks bright

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Emerging from one of the worst economic slumps in a generation, the hospitality industry is poised to rebound later this year.

That is the conclusion from a report released Monday by the accounting and auditing firm of Ernst & Young.

The report, titled ‘Global Hospitality Insights,’ doesn’t paint a rosy picture for hotels, airlines and other travel and tourism companies in 2010, but it does make clear that the worst may be in the past.

Business travel took the biggest hit during the recession, dropping 7.5% in volume through the third quarter of 2009. But due to rising corporate profits and pent-up demand, business travel should increase by 2.5% this year, according to the report.

While Ernst & Young expects domestic leisure travel to remain weak in 2010, the report says international inbound travel to the United States should increase by 3% by the end of the year.

‘Despite the recent trepidation and the still-bumpy road ahead, the prospects for tourism appear favorable in the mid- to long-term,’ the report said.

The good news, the report points out, is that construction of hotel projects is on the decline, dropping by 34% in the third quarter of 2009. With a decline in supply, hotel operators can focus on increasing occupancy, and later they can take aim at increasing revenues with higher room rates, the report said.

-- Hugo Martin