How will the Sluggish U.S. Economy Affect the Hotel Industry?

Nov 27, 2015

The U.S. hotel industry has continued to sail forward, despite slowing employment growth and tepid gross domestic product. RevPar, a key industry metric calculated by multiplying a hotel’s average daily room rate (ADR) by its occupancy rate, also rose for major U.S. hotels. As long as the U.S. economy does not plummet in 2016, many in the industry are anticipating gains in both RevPar and occupancy.

Choice Hotels International, the operator of brands like Comfort Inn and Econo Lodge, saw its RevPar rise 5.8% year over year in the quarter. In addition, Choice Hotels’ occupancy levels improved by approximately 120 basis points from last year, thanks to an increase in demand for rooms from business and leisure travelers. Choice Hotels’ competitors, Marriott and Hilton, also enjoyed a strong third quarter. RevPar rose by 4.2% and 5.8%, respectively.

Despite these gains, however, Choice Hotels’ third-quarter earnings were only 72 cents a share. This matched the profit forecasts made by Wall Street. In addition, RevPar and rate of occupancy was slower than what was seen in the second quarter.

Choice Hotels President and CEO Steve Joyce downplayed any impact of the slowing U.S. economy, “It’s not the economy. For the third quarter we ended up a little short of where we thought as there were some technical reasons — there were two fewer Fridays, and Labor Day weekend shifted; also August was a little slower,” He went on to say that “September boomed back, so we are not concerned at all as we are seeing really strong results.”

Research by industry research firm STR reveals that the U.S. hotel industry has seen a 6.7% increase in RevPar this year through the month of September. In addition, the occupancy levels across all U.S. hotels in the last 12 months through September have averaged 65.4%. According to STR, this is the highest in any one-year period since 1988.

In general, the hotel business is more reliant on employment, consumer confidence and supply/demand than ever before. Hotel executives are now eagerly waiting to see what happens with Starwood Hotels. According to Bloomberg Business these hotels are rumored to have received buyout interest from Hyatt and several Chinese firms. Choice Hotels is especially interested to see the outcome. “If someone that is an existing competitor picks Starwood up, that will make that competitor a lot stronger than us…” explained Joyce.

For the hotel industry, scale is everything. What about the small hotels? Are you trying to keep up with customer’s demands and preferences while running your boutique hotel or bed and breakfast? Securing hotel credit card processing – like the hotel support found at EMB – can help you turn your small idea into a big money maker.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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