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Business and Luxury Travelers Are Back: Starwood CEO
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Special to CNBC.com
Hotel occupancy rates continue to rise—especially at luxury destinations—as business and leisure travelers put the "wave of paranoia" behind them, Starwood Hotels President and CEO Frits Van Paasschen told CNBC Thursday.
"For months people were asking me whether luxury was dead," said Van Paasschen. "I said I thought it would come back when people in business felt better, and that's exactly what we saw."
Occupancy at the company's high-end W Hotel rose 28 percent in the first quarter, while it was up about 15 percent at The Luxury Collection and St. Regis brands, Van Paasschen went on to say.
This is a significant shift, as spending on extravagant hotels was considered a bit out of fashion during the recession.
Van Paasschen added that the luxury traveler started to return at the end of the summer, while business travelers slowly made their way back in the fall. Business travel in particular continues to grow, as companies once again begin to book meetings, events and conventions.
"Businesses are saying, 'You know what, the world looks better than we thought,'" he said. "That meeting...[they] weren't sure about, they're booking those meetings now."
One difference, though, is that Starwood [HOT
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] used to have a year's leadtime on these reservations. Now, companies are only booking conference rooms three to six months ahead of time.
Starwood will once again open about 80 hotels in 2010, which means about 12,000 new jobs, Van Paasschen said. However, many of the openings will take place overseas, which means a majority of the positions will benefit workers outside the US.
Van Paasschen also said international travel continues to be a strength for the company, with business travel bookings rising more than 40 percent in London and Paris during the first quarter. Emerging markets have also been a highpoint for the Starwood, said the CEO.
The bad news for travelers—these positive trends will likely mean a rate hike in the near future. That would be the company's first in about a year, Van Paasschen admitted.
Starwood on Thursday reported earnings that handily beat analysts' expectations, earnings 13 cents a share excluding items. A consensus estimate had forecast the company would earn 2 cents a share.
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