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1991 HOTEL LOSSES AT $2.7 BILLION -- HALF OF PREVIOUS YEAR'S LOSSES, ACCORDING TO ARTHUR ANDERSEN'S HOST REPORT

1991 HOTEL LOSSES AT $2.7 BILLION -- HALF OF PREVIOUS YEAR'S LOSSES,
 ACCORDING TO ARTHUR ANDERSEN'S HOST REPORT
 LOS ANGELES, June 3 /PRNewswire/ -- In spite of the lowest occupancy rates in more than 20 years, the U.S. hotel industry showed dramatic improvement in 1991 operating margins. As a result, losses in the hospitality industry for 1991 were $2.7 billion, less than half of the previous year's estimated losses of $5.5 billion, according to The HOST Report, a semi-annual publication by the Arthur Andersen Real Estate Services Group and Smith Travel Research. Average net loss per room in 1991 was $1,007, a significant reduction from 1990 estimated losses of $2,081 per room.
 According to David Berins, worldwide hospitality industry consulting director for Arthur Andersen, "Battling the effects of the Persian Gulf war and the lingering recession, hoteliers took quick and drastic action, cutting costs across the board and tightening controls. At the same time, the industry benefited from lower interest rates and restructured debt payments. Hotel labor costs were reduced by $1.08 billion, reflecting substantial cuts in staffing at all levels. Interest expense was reduced by $1.27 billion. The remaining savings of $350 million came from other cost- cutting measures."
 Highlights from the full publication, which will be distributed in July, include:
 -- Full-service hotels (those with restaurants, meeting space and other services) achieved a 47 percent reduction in net pre-tax loss to $1,531 per room, compared to a loss of $2,851 per room in 1990.
 -- Limited-service hotels (those without restaurants) after posting a pre-tax loss in 1990 of $192 per room, turned the corner in 1991, recording net income of $206 per room. Revenues increased slightly in the limited-service segment, and operating costs were higher in many categories. However, a substantial drop in interest expense allowed operators to post a modest year-end net profit.
 -- Net losses for all-suite hotels were also substantially lower in 1991, $543 per room for those properties with food and beverage service, and $1,114 for those properties without food and beverage.
 -- Full-service hotels spent an average of $42.90 per occupied room night in 1991 on labor and related expenses, compared to $43.12 for 1990.
 Randy Smith, president of Smith Travel Research, noted, "This solid improvement in operating performance during 1991, combined with an expected improvement in the supply/demand relationship during 1992, should enable the industry to regain direction, growth, and profitability in the near future."
 Data on revenues and expenses in the 1991 edition of The HOST Report are a compilation of operating statistics from 2,369 U.S. hotels, the largest sampling of operating data ever published on the United States hotel industry.


The HOST Report -- Annual Report for the Year 1991 will contain more than 100 pages of tables and charts presenting data by size, age, region, and type of hotel. The publication will also provide data on full-service and limited service hotels in 21 major market areas.
 -0- 6/3/92
 NOTE: Complimentary copies for members of the media of The HOST Report can be obtained by calling Gregg Nicholson in the San Francisco office of Arthur Andersen at (415) 546-8474.
 /CONTACT: Gregg Nicholson of Arthur Andersen, 415-546-8474 (work), or 415-863-3758 (home)/ CO: Arthur Andersen ST: California IN: SU:


MC-MM -- SF001 -- 6543 06/03/92 10:01 EDT
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Date:Jun 3, 1992
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