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Hoteliers Eye Booming 2006: Report

The U.S. hotel industry should post record profits in 2006, based on a recent report by PricewaterhouseCoopers’ hospitality practice. Not only is 2006 likely to bring record profits but also the industry should expect two more years of solid growth.

The combination of strong business and leisure travel plus little new construction has helped the hotel market stage a dramatic comeback from its post-9/11 slump. As a result, PricewaterhouseCoopers expects the U.S. lodging industry to earn $20.8 billion pre-tax in 2005 — and that will represent a 25% jump over 2004. That number is even more impressive when you factor in that hotels spent $4.8 billion on capital improvements in 2005. Much of those capital improvements centered on renovating lobbies and rooms, plus myriad other embellishments.

“There has definitely been some competition on the amenities side as every brand tries to differentiate itself,” says Alan Tantleff, executive vice president at Chicago-based Jones Lang LaSalle Hotels.

Indeed, brands such as Hilton are installing granite counter-tops in their suites as other brands offer guests free breakfast and wireless Internet service. Even less common finishes such as bidets are popping up in full-service hotels such as Manhattan’s Waldorf-Astoria. Earlier this year, the famed Manhattan hotel installed a dozen bidet units from that attach to the existing plumbing.

Tantleff says that most hotels believe strongly in this amenity-driven strategy—simply, that exotic amenities will give them an edge over competing brands. So what’s next?

“We’ll probably see flat-screen televisions in some branded hotel chains soon,” he says.

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