Shares of hotel companies dropped on Monday - and plunged further after the House rejected a $700 billion bailout of the U.S. financial system - as the travel outlook for 2009 grew gloomier amid the escalating economic crisis.
Early Monday, Goldman Sachs analyst Steven Kent said he expects U.S. revenue per available room to remain negative "well into 2009" as troubles in the financial sector exacerbate declines in corporate travel spending.
Kent said he expects more bad news ahead. "We think shares will continue to grind lower in the coming months, but we acknowledge that given the past 12 months underperformance it will be more of a slow drip rather than a sharp, rapid decline," he said.
After the market closed on Friday, Citi Investment Research analyst Joshua Attie also said next year's outlook appears worse than his earlier expectations and lowered his 2009 estimates for 12 lodging companies. "Our sense is tighter credit could result in a more difficult economic environment than we previously anticipated," he said.
Attie said a sector recovery in the second-half of 2009 appears "less likely."
Starwood Hotels & Resorts Worldwide Inc., Morgans Hotel Group Co. and Orient-Express Hotels Ltd. were among those with the steepest declines following the House vote.