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Show Hotel-iotel Industry Expects A Better Year Despite the Inn dies of rcces-s rcces-s iii nary conilitions, hih money and interest rales, and lackluster occupancy levels, the hotel-motel industry registered reg-istered a creditable performance perform-ance last year, according to liabson's Reports Inc. April I. 19K2. Some of the operational impediments will I inner over the next few months, but an expected pickup in the business busi-ness pace in the last half should relied favorably upon hotel-motel hotel-motel demand factors. THIS ( OI I.I) be a significant signifi-cant boost because an estimated esti-mated 61) percent of room-nights room-nights occupied is connected with the business segment. Also, as the economic tempo picks up, there will be an increased in-creased rate of activity in the other major sector of lodgings' revenues and earnings pleasure plea-sure travel. Lodging companies vary dramatically as to the sie and scope of their operations. In some cases, lodging represents repre-sents the mainstay of annual revenues and profits, liy contrast, con-trast, in other situations it's only a modest factor in overall corporate results. Competitor! in the publicly owned chains lakes a variety of forms. FOR F.XAMI'l.E, the well-known well-known Howard Johnson inns are owned by the British-based Imperial Group Ltd.. which has other broad interests. In addition, the lure of attracting travelers' dollars has brought some relatively small, as well as siable, independent outfits into the hotel-motel business, l or instance. Best Western is the second-largest system in the world in rooms available, but is a private concern. Also, it's well to remember that investor awareness of the relative contribution to sales and profits and to markets served is vital to properly gauge the direction of results. COMPETITIVENESS has changed this industry over the years. In some cases, growth has been fostered via franchising franchis-ing or by providing management manage-ment serviteson contract. The advantages of utilising such vehicles are maniforld. Indeed, In-deed, operating on a large scale yields the ability to attract financing at reasonable rates. Furthermore, enhanced volumes permit corporate purchasing pur-chasing at discout levels and provide the ingredients wo warrant and support sophisticated sophisti-cated reservation systems and in-depth management resources. re-sources. Accordingly, the progress of chains has easiK outstripped the independents. Looking ahead, we expect the competitive edge to favor the more sizable, well-established firms. THE ILL-EFFECTS of the current recession notwithstanding, notwith-standing, the favorable availa-' bilitv-cost relationship of gasoline is a definite plus for this industry's prospects. Also on the bright side: Convention bookings are generallv made vears in advance. In IWI con vention bookings were run' ning at a high level, which augurs au-gurs well for results. Mosi of the lodging majors arc enjoying en-joying the benefits of scw.il " vears ol good earnings. uin.. h have bolstered their fin.uki.il positions. Similarly, industry participants have not only upgraded up-graded their facilities but have disposed ol the weaker or marginal mar-ginal units. - To dale in 1 SS2 the perform-' ance of the common stocks of -the hotel-motel group has been superior to the more compre- ' : hensive market average;...;' Admittedly, we expect some soft spots in lodging in the first half of this year. However, the .: Research Dept. of Babson's , Reports Inc. has concluded . from a recent study of this business segment that increased in-creased lodging Activity will .' emerge in the latter part of -19X2. HENCE, THEY are advising , : their clientele to maintain most . common stock commitments; . ; at this juncture. However, for : .. clients with an adequate cash ; reserve position established . Babson favors the purchase of . the speculativ e-grade common - -stock of La Quinta Motor - . Inns near $16 traded on the NYSE. P-E 19. yield nil. |