Coming out of lodging industry recessions, we have historically observed fairly significant increases in hotel operating expenses. Since the initial revenue recovery is typically driven by occupancy, variable expenses naturally rise with the increased volume of rooms occupied and guests served. In addition, hotel managers desire to reinstate the services and amenities that were discontinued during the downturn contributes to above-average expense growth.

On the revenue side, the industry recovery observed in 2010 was “typical”. In aggregate, the participants in PKF Hospitality Research’s (PKF-HR) 2011 Trends® in the Hotel Industry survey saw their rooms revenue (RevPAR) rise 5.3 percent, the result of a 6.2 percent increase in the number of rooms occupied and a 0.9 percent decline in average daily room rate (ADR). One would expect such an imbalance of occupancy and ADR to cause a sharp rise in operating expenses, but that was not that case. The “atypical” trend we observed in 2010 was a very modest 3.4 percent increase in total hotel operating costs.

Labor Is Costly

When analyzing hotel expenses, labor costs (inclusive of salaries, wages, bonuses, and payroll-related expenditures) are usually the first item to be examined since they are the largest expense. Since 1960, unit-level hotel labor costs have averaged 43.7 percent of total hotel operating expenses and have increased at an average annual rate of 4.3 percent. This compares to an average annual increase of 4.0 percent for all other operating expenses combined.

Changes in hotel labor costs are also extremely volatile. From 1960 to 2010, the standard deviation for the annual changes in unit-level hotel labor costs was 4.2 percent. During this time period the annual changes in hotel labor costs swung from a high of positive 12.3 percent to a low of negative 10.4 percent.

Labor Is Controllable

Despite the challenges, hotel operators do adjust their staffing and payrolls according to changes in business volumes. Over time, labor costs measured as a percent of total revenue fall in a very tight range of 30 to 35 percent. This indicates that managers will react to changes in revenue.

It was management’s ability to control labor costs that resulted in only a modest rise in total operating expenses during 2010. From 2009 to 2010, hotel labor costs increased 2.7 percent. This is well below the long run average. For comparison purposes, all other operating expenses grew by 5.3 percent in 2010, significantly above the long run average for this measure.

Controlling Factors

We attribute management’s ability to control labor costs in 2010 to three main factors: increased productivity, controlling employee benefits, and persistent high levels of unemployment.

• Hotel Labor Productivity

Concurrent to the 2.7 percent rise in labor costs from 2009 to 2010 was a 6.2 percent increase in the number of rooms occupied. Therefore, when measuring labor expenditures on a dollar per-occupied-room (POR) basis they declined by 3.4 percent, indicative of enhanced employee productivity. For example, in the rooms department with a great amount of variable staffing (desk clerks, room attendants, bell staff, laundry), labor costs increased 3.6 percent on a dollar per-available-room (PAR) basis, but declined by 2.5 percent on a POR basis.

• Employee Benefits

Historically it has been the payroll-related expenses (USALI vernacular for hotel employee benefits) portion of labor costs that has concerned hotel operators. For the most part, hotel management can adjust hours, wages rates, and salary levels. However, a large component of payroll-related expenses (taxes, health benefits) is government mandated, thus less controllable.

In 2010, hotel managers were successful in bucking this trend. During the year, salaries, wages, and bonuses increased by 3.2 percent. Meanwhile, the payroll-related component of compensation grew by just 1.4 percent.

According to an October 3, 2011 article in the Wall Street Journal, Marriott International has instituted a policy that allows hourly staffers to take, “paid time off in shorter, part-day increments, so they can manage doctor or school appointments without having to take an entire day off.” In an October 5, 2011 HotelNewsNow.com article, Michelle Russo of Hotel Asset Value Enhancement commented on recent practices she has observed among management companies. In addition to cuts in executive committee salaries and changes in incentive calculations, she had seen management companies freeze their 401K contributions. However, as market conditions have improved in 2011, Ms. Russo warns that more managers are achieving their incentive bonuses, thus causing a rise in payroll costs. In addition, 401K matching is being reinstated and pushing year-over-year increases in benefit expenses.

• High Unemployment

The persistent high levels of unemployment have suppressed the pressure on all business owners to raise wages rates and salaries. Unemployment levels have been the highest among people with the least educational experience and lowest levels of income. This is particularly pertinent in the lodging industry which offers a high percentage of low-skilled, line-level positions.

Looking Forward

Several indicators point towards a continuation of relatively low increases in hotel labor costs in the future. As of September 2011, the Bureau of Labor Statistics is forecasting total compensation for all private industries to increase at an average annual rate of 2.4 percent from 2011 through 2015. This is less than the 4.0 percent long-run average for this measure. Further, most economic forecasters are projecting continued high levels of unemployment among the traditional labor pool for line-level hotel employees.

Randy Pullen, president of WageWatch, Inc., noted in an October 16, 2011 article on HotelsMag.com that he has already seen hotel operators report a roll back in the labor cost increases that hoteliers were initially expecting for 2011. In November of 2010, 2,400 hotels had reported to WageWatch that they budgeted for a 2.9 percent average increase in hourly and salaried compensation for the upcoming year. Through October 2011, WageWatch survey participants were reporting that actual labor cost increases for the current year have materialized at an annual rate of just 1.4 percent. Staffing levels may be up due to the increase in occupancy, but the salary and wage component of labor costs still appears to be under control.

According to the December 2011 edition of Hotel Horizons®, PKF-HR is forecasting extremely low levels of new supply, along with above-average increases in demand and ADR through 2015. The net result will be annual RevPAR gains ranging from 6.1 to 7.4 percent through 2014. The ability of hotel managers to control labor costs will be a major contributing factor enabling revenue gains to translate into double-digit annual growth in profits.

* * *

For more information on PKF-HR benchmarking reports, please visit www.pkfc.com/store. This article was published in the December 2011 issue of Lodging.

Distribution Channel Performance

In this issue of the TravelClick Perspective, we focus on 2011 distribution channel performance, based on transient booking data collected by TravelClick from major hotel chains.

Strong demand growth in 2011 provided hotels more choices in how to manage demand across different distribution channels. Every channel experienced year-over-year demand growth in 2011, albeit not to the same degree. Overall demand growth in the transient segment was 3% year-over-year. However, the Web channel, defined as bookings coming in through the hotel website, grew the most, with an increase of 6.3% compared to the prior year. The GDS channel also posted a strong growth of 5.9% compared to the prior year. The average daily rate (ADR) for Web and GDS channels also grew with increases of 3.5% and 3.2% respectively. The online travel agency (OTA) channel realized the highest ADR growth with an increase of 9.8% and an increase in demand of 3.5% compared to the prior year. This channel continues to play a strong role accounting for 11.4% of overall transient segment demand.

The central reservations system (CRS) channel grew ADR by 2.1% year-over-year but with a matching decrease in occupancy of -2.1%. The hotel direct channel grew marginally by 0.7% compared to prior year. 2011 represented a continued shift of booking activity to electronic distribution channels.

2012 Distribution Channel Outlook

The demand outlook continues to be healthy with group segment demand up 5.3% and transient segment demand up 2.3% for 2012 compared to the same time a year ago, based on reservations currently on the books for 2012.

The electronic distribution channels continue to lead the way with occupancy increases in the OTA, Web, and GDS channels of 8.9%, 8.0%, and 2.0% respectively compared to the same time last year. This performance outlook also reflects the different business versus leisure booking pattern characteristic of each channel. The CRS and hotel direct channels are currently showing declines from prior year of -1.5% and -2.8% respectively. Pricing continues to strengthen with the OTA channel leading the way with a 9.0% increase in ADR compared to a year ago.

While it is quite early in the year and most of the transient demand activity is focused on Q1 and Q2, the distribution channels continue to show an outlook similar to last year. The strong demand outlook will continue to present hoteliers with opportunities to drive optimal channel mix and pricing to maximize performance.

Performance Summary

The chart below shows the year-over-year position by market of committed occupancy, reserved occupancy, ADR and RevPAR, based on business on the books for the future 12 months. Committed occupancy is group blocks plus transient reservations. Reserved occupancy, ADR and RevPAR are based only on reservations (group pickup and transient reservations). Shades of green indicate performance better than the market average. Shades of orange/red indicate performance worse than the market average.

About TravelClick

TravelClick (www.TravelClick.com) is a leading provider of profitable revenue generating solutions for hoteliers worldwide. TravelClick offers hotels world-class reservation solutions, business intelligence products and comprehensive media and marketing solutions to help hotels grow their business. With local experts around the globe, we help more than 30,000 hotel clients in over 140 countries drive profitable room reservations through better revenue management decisions, proven reservation technology and innovative marketing. Since 1999, TravelClick has helped hotels leverage the web to effectively navigate the complex global distribution landscape. TravelClick has offices in Atlanta, Barcelona, Chicago, Dubai, Hong Kong, Houston, London, Melbourne, New York, Orlando, Shanghai, Singapore and Tokyo. Follow us on www.twitter.com/TravelClick and www.facebook.com/TravelClick

Information in this newsletter covers the top 25 markets in North America and is based on data supplied by brands participating in TravelClick's MarketVision Demand Position reporting.

28 March 2012 9:33 AM
By Jason Q. Freed
News Editor-Americas
jfreed@HotelNewsNow.com
 

• Rate is leading the recovery race now.
• Davidson Hotel Company’s Regional Director of Revenue Management Melanie Buller offered anecdotal operator reasons why U.S. hotels are experiencing rate growth.
• Despite an expected slowdown in April, forward-looking booking data shows demand increasing at a steady pace into the spring and summer seasons.

A common question I run into when discussing PTACs – what is the average lifespan, what are good cleaning and maintenance tips, who is best suited to perform this – maintenance crew, housekeeping or housemen – how much time should be allocated for these tasks and many other related questions, all very valid and of high impact.

Below are several articles that speak to many of these questions – if you have any thoughts to add, please do so!

Why upgrade? HVAC and PTAC maintenance   
 By Elliott Mest 

  

Ensuring your hotel guests are comfortable is crucial, but doing so with outdated equipment is a surefire way to suffer under ever-rising utilities costs.

 “The HVAC on your property deserves the lion’s share of investment,” said Jonathan Byrnes, vertical market manager for hospitality at LG Electronics USA. “The number one consumer of power in your building will be your HVAC, and it is your infrastructure. When the air conditioning is bad in a room, a guest might stay the night and not come back for a second time, but if there is no air conditioning at all they will leave and never come back.”

Randy Dawes, corporate director of facilities at Select Hotels, worked to counter rising utilities costs. “We’ve definitely been more diligent in replacing the [climate controls] in our HVAC systems in order to be more efficient,” said Dawes. Many of the modern HVAC climate system controls have built in occupancy and humidity detectors that automatically shift their energy output in order to maximize the comfort being distributed alongside energy output.

“The energy efficiency afforded by these new controls is difficult to compare to older models, and the units themselves are getting smaller,” said Dawes. “Large, modern commercial HVACs can automatically throttle down its power output as a room becomes comfortable, which saves a large amount of money on unnecessary power costs that you avoid with proper controls.”

“Right now in the hotel industry there is a lot of emphasis on turning over properties to independent franchisors,” said Byrnes. “If you are selling a property you want to make sure your appliances are updated, or you will never get your asking price. Aside from that, inefficient A/C makes guests angry and raises costs.”

For smaller hotels that are unable to afford the large machinery of an HVAC, there is PTAC maintenance. The majority of operators upgrade their PTAC equipment on an as-needed basis, but how often these pieces of equipment are cycled out depends on size of hotel and location. According to Kevin Wiggs, regional manager of Champion Hotels, 10 PTACs might be recycled per year in a hotel operating 70 rooms.

Dawes said that his PTACs are on a five- or seven-year cycle based on the hotel’s placement in the country. “PTACs tend to have shorter lives in the southern states, and the rule is generally that any state above Kentucky will try and stretch out a PTAC for seven years.”  

Dawes has recommendations for hotels that are actively replacing obsolete PTACs: purchased machines that use transcendental wheel technology over fan blades, which work to reduce noise. “A PTAC is a negative sound and visual impact on a room, and can degrade the room’s quality,” said Dawes. “With transcendental wheels you can lower the overall noise, which we are proponents of.”

Dawes also pointed out changes in EPA regulations, mandating that the effectiveness of PTACs must increase. “In limited-service properties, a PTAC is a major part of the room, so it is an important thing to look into.”

Due to cost of a HVAC, hoteliers are forced to consider when to make the investment. Jonathan Byrnes says that the time is now.

“There are state and local rebates available for upgrading to modern HVAC technology, and it is a good time to upgrade,” said Byrnes. “Any time is a good time to update your controls, especially if you are operating a building [constructed] in the late 80s or early 90s. You might have a good boiler that can last 20 to 30 years, but there is just no way it is being efficient after all that time.”

Operations: ACs and HVACs

4 Apr, 2011By: Esther HertzfeldHotel and Motel Management

Jim Clements, VP of operations for Innworks

A vital part of hotel guestrooms, packaged terminal air conditioning units must be properly maintained in order to perform effectively and efficiently, according to Jim Clements, VP of operations for Innworks.

“PTACs are vital to a good guest experience,” he said. “They must be in appropriate working order to offer that experience.”

Clements, who has been in the hotel/hospitality operations business for more than 30 years, has created a PTAC checklist for Innworks’ three properties to follow in order to maintain good PTAC systems.

Clements gives the Innworks’ GMs and the maintenance staff a checklist each month for PTAC maintenance. Every room’s PTAC is checked at least once a month and as needed.
 

The cleaner the PTACs are, the better the units run and the lower the utility costs are, Clements said.

◾ Each month, every PTAC filter is cleaned.
◾ Drip trays are cleaned every month or as needed because “they can smell,” Clements said.
◾ The coils are cleaned twice a year or as needed.
◾ The outside grills are checked regularly to make sure none of them are bent, which affects air flow.

“This is just the basics that should be taken care of,” Clements said. “Air conditioners can last a significant amount of time — as long as you take care of them properly.”

Clements has a sign-off form that each GM needs to check off on each month. Several times a year Clements visits each property and checks the units in each room, among other maintenance checks.

Every PTAC manufacturer recommends a complete cleaning of each unit at least once per year or more, if conditions warrant.

In dusty or corrosive environments such as near construction sites or salt water, cleaning must be performed more often, sometimes up to four times a year. In addition to cleaning the filters, fans, fan shrouds, drain passages and base pan, all coils in each unit should be thoroughly cleaned.

Sleep Inn room

Recommendations for HVAC, PTAC maintenance and prolonging product life

Keep the unit clean. Dirty filters impede the flow of air across the (indoor) evaporator coil. This makes the heat exchange process less efficient and forces the compressor to run longer to achieve the desired temperature.

■ It is recommended that the air filter be cleaned twice a month or more depending on the environmental conditions using lukewarm water.
■ The chassis/coils should be cleaned every three to four months depending on environmental conditions. Nonpressurized water and a mild detergent are recommended for cleaning.
■ Do not use any cleaner containing acetone or ammonia, that is alkaline-based or any acidic cleaners.

Make sure the housekeeping staff adjusts the temperature when they are cleaning a room. If they continually forget to do this, you can have units running anywhere from 12 – 14 hours per day with no occupants; this wastes large amounts of money and energy.
Watch for signs of poor working order. Banging noises are a sure indicator that the unit is in need of service. To ignore this problem will lead to unit failure.

If the unit seems to be running all the time or overly long, this is a clear indication of a problem. If this happens, the unit is not reaching the temperature set point or is operating inefficiently. Have the unit repaired immediately so you don’t waste energy or money running a unit that can’t handle the workload.

Source: Ben Broido, national sales manager, PTAC, LG Electronics USA.

Are your PTAC units in proper shape to keep guests cool?

Many Choice Hotels International franchisees use packaged terminal air conditioning systems to heat and cool their guestrooms. PTACs help franchisees reduce utility costs because the systems are localized and only heat and cool occupied rooms. But proper maintenance and cleaning are essential to keep these systems working efficiently and to ensure that every guest has a pleasant stay.

PTACs that are not cleaned regularly have a tendency to emit odors that guests often find unacceptable. In fact, many Choice franchisees have failed QAR inspections due to poor maintenance of their PTACs.

Most PTAC manufacturers recommend a complete cleaning at least once a year. If local conditions warrant, cleanings may be required up to four times each year. Frequent cleanings are particularly important in dusty or corrosive environments, such as near construction sites or salt water. A well-maintained PTAC system could last seven to 10 years, with that figure dropping significantly when units are neglected.

PTAC filters, fans, fan shrouds, drain passages and base pans can be cleaned with basic equipment — bristle brushes, towels and vacuum cleaners are usually sufficient. Keeping the filters clean is essential for energy efficiency. Dirty filters can restrict airflow, which makes the engine work much harder. In addition to using more energy, this could shorten the life of the PTAC system.

It is also extremely important to clean the base pan. The most common cause of unpleasant odors from PTAC systems is the accumulation of condensation. If water sits in the base pan for an extended period of time, it becomes stagnant and the base pan becomes a breeding ground for odor-causing bacteria.

While cleaning most parts of a PTAC system is fairly simple, cleaning the heating and cooling coils is not. This process usually requires that the PTAC system be removed from the wall and taken to a remote work area. The chemicals used to clean coils can be toxic. If they are applied to the PTAC system in a guestroom, the chemicals could get onto carpeting, curtains or upholstered surfaces. This could be dangerous for future guests and it could damage the fabric.

While some companies sell products that they claim make it easy to clean the coils in the guestrooms, hotel operators should take every precaution to ensure health and safety. This usually means removing PTAC systems from guestrooms prior to cleaning so that the chemicals can be applied and discarded safely.

Zoneline PTAC

Removal of the systems from the wall requires care to ensure that electrical cords and other PTAC components are not damaged. Removal of PTAC units typically requires two people because PTACs can weigh 150 pounds or more.

Hotels with large engineering or maintenance staffs typically handle PTAC cleaning themselves. Smaller properties often hire contractors because the hotels may not have the equipment or personnel necessary to move and clean the systems properly. When PTACs are removed from guestrooms for cleaning, the rooms are unusable for at least one day, sometimes longer.

When the systems are returned to the guestrooms, the maintenance staff should check for anything near the PTACs that could restrict airflow. Trees or shrubs on the outside of the hotel may need to be trimmed, and mulch or debris may have to be removed. Inside the room, furniture should not be positioned too close to the system.

These simple maintenance suggestions should help franchisees extend the life and performance of their PTAC systems. Guests will have more comfortable visits and owners can reduce their operating costs. Proper PTAC maintenance is a winning proposition for everyone.

Source: Choice Hotels International.

Fredrichxx PTAC

Cleaning PTAC coils efficiently

Various methods have been used to clean the coils in a PTAC, including the use of a soft bristle brush and vacuum or blower, a garden hose and pump spray bottle, pressure washers and steam cleaners. Traditionally, the PTAC is removed from its wall sleeve and taken to a remote work area where cleaning is performed. This cleaning process is time consuming and leaves the room unusable until the PTAC is reinstalled. Additionally, extra care must be taken to protect electrical components from overspray when hoses, steam cleaners or pressure washers are used.

Source: www.goodway.com/ptac-coil-cleaner.aspx.

And you thought this was a dilema 5 years ago?! Well, guests travel with more devises, demand more and faster bandwidth and want it to flow like a hot shower -available on demand, flowing fast …. and free.

Some extracts from an article that captures the issues: highlights are listed below, click here for the full meal deal. 

26 March 2012 6:51 AM

By Brendan Manley
HotelNewsNow.com contributor

Story Highlights

• From laptops to smartphones to tablets, guests are now looking to connect all these devices simultaneously to a hotel's network, preferably for free, potentially draining greater bandwidth than ever before.
• Whether a hotel opts to charge for broadband, owners can expect to sink dollars into infrastructure, one way or another.
• Greater value, and hopefully fewer headaches, can also be gained by relying on a provider who bundles wired/Wi-Fi connectivity with other services such as TV, video, gaming, etc., because the platforms all utilize the same infrastructure.

Extracts

• Now, many guests arrive at a hotel after leaving homes equipped with some serious bandwidth, plus countless channels and unlimited streaming movies. On the road, these travelers come armed with an array of mobile devices
• "Universally, I can look at my guest satisfaction scores, and I can say that people generally are going to comment about three things overall: They don't like paying for Internet, the speed is too slow, or they have difficulty connecting,"..
• "If it's too slow, it goes off, or it drops, the guest will remember that longer than he'll remember if his coffee was cold or his BLT didn't have chips with it when it arrived."
•  "It's one thing having a basic service for free, but it's important to have a service that works at a reasonable cost. It's better not to give it away free than to have it not working."
• Another solution gaining momentum is tiered billing, which essentially offers several classes of fees, based on usage levels… "Make sure your provider has tiered bandwidth options. If he doesn't, don't go there,"
• Whether a hotel opts to charge for broadband, owners can expect to sink dollars into infrastructure anyway….. nowadays, more access points are often needed, especially because the newest breed of Apple devices are notorious for having weaker antennae.
• "What we're finding is that hotels that got wired as little as three years ago are now having to get their Wi-Fi people back in to increase the density,"
• Today, IT professionals are urging owners and developers to invest in the best fiber-optic connectivity possible, then configure the rest of the data architecture from there.
• Greater value, and hopefully fewer headaches, can also be gained by relying on a provider who bundles wired/Wi-Fi connectivity with other services such as TV, video, gaming, etc. because the platforms can all utilize the same infrastructure.
• For now, experts say all hoteliers can do is provide the most bandwidth possible in their properties because it's a near certainty guests will use it. That may involve charging a nominal fee per guest to offset the rising costs of hardware upgrades, but in the long run guests are still more willing to pay for a service that works than one that leaves them lagging.

26 March 2012 6:51 AM
By Brendan Manley
HotelNewsNow.com contributor

 

• From laptops to smartphones to tablets, guests are now looking to connect all these devices simultaneously to a hotel’s network, preferably for free, potentially draining greater bandwidth than ever before.
• Whether a hotel opts to charge for broadband, owners can expect to sink dollars into infrastructure, one way or another.
• Greater value, and hopefully fewer headaches, can also be gained by relying on a provider who bundles wired/Wi-Fi connectivity with other services such as TV, video, gaming, etc., because the platforms all utilize the same infrastructure.

22 March 2012 9:55 AM
By Stephanie Wharton
Reporter
swharton@hotelnewsnow.com
 

• There is money in the market for the right borrowers with the right business plans. It’s just a matter of whether borrowers are willing to accept recourse.
• Construction plans need to be in-depth before getting financing for construction, said Jennifer Dakin of Wells Fargo.
• “As a borrower, I worry when a lender’s not making money. Today, even with rates low, lenders are making money,” said Thayer Lodging’s Chris Allman.

20 March 2012
By Stephanie Wharton
Reporter
swharton@hotelnewsnow.com
 

• After taking the U.S. out of the equation, either 60% of the world is in recession or rapidly slowing, according to Economist Rajeev Dhawan.
• The emerging economies are providing some help to the established markets, but those economies are showing signs of losing steam.
• “Do not look at the unemployment rate, even remotely, as an indicator of how the economy is doing for the next couple of years,” Dhawan said.

 

Dr. Rajeev Dhawan, director of the Economic Forecasting Center and professor at Georgia State University, speaking at the 2012 Hunter Hotel Investment Conference.

 

ATLANTA—While the economy continues to show signs of improvement and the hotel industry has so far dodged bullets from high oil prices, hoteliers need to keep a close eye on the headlines, economist Dr. Rajeev Dhawan said at the Hunter Hotel Investment Conference.

“Some people think that we are on the acceleration path. The answer is no. It’s just the headwinds have become less,” Dhawan, director of the Economic Forecasting Center and professor at Georgia State University, said during a session titled “2012 Economy and Beyond: Its Impact on the Lodging Industry.”

The financial meltdown in Europe, particularly Greece, is not going to happen for a while, he said. But hoteliers in the U.S. should still keep an eye on what is happening in the region, Dhawan said. “If there’s a hiccup over there, it’s going to affect our companies over here … What if there was a 5% hiccup? It drops the (gross-domestic-product) growth by about 0.2, 0.3, 0.4 percentage points.”

Hoteliers should look at demand sources, he said. “How much of your revenue is dependent on Europe?”

A hotel in Panama City Beach, Florida, might not feel the effects of the European financial crisis as a hotel with a large base of international guests in Washington, D.C.

Global worries
Other countries to watch out for are China, Brazil, Russia, India and Turkey. The emerging economies are providing some help to the established markets, but those economies are starting to show signs of slowing.

“Once (the emerging economies) slow down, we’re going to have trouble with financing over there,” he said.

China, India and Turkey all are dependent on Iran for significant percentages of their oil consumption. Cutting off supply in the case of an Iranian crisis will not be an easy transition. “If they don’t get the oil, they’re not going to be able to make it,” he said.

After taking the U.S. out of the equation, either 60% of the world is in recession or rapidly slowing, Dhawan said. “If you’re dependent upon foreign travel and foreign tourists, you need to be a little careful,” he said.

Unemployment rate
Reports that unemployment is falling and consumer confidence is on the rise should be taken with a grain of salt, Dhawan said.

“Why has the unemployment rate suddenly gone from 10% down to 8.3% so quickly,” he said.

While the proportion of adults in the 55-plus age group have extended their careers because of concerns about the economy, those in the 16-24 age group continue to put off finding a job until later.

“Do not look at the unemployment rate, even remotely, as an indicator of how the economy is doing for the next couple of years,” Dhawan said.

‘Jittery’ confidence
Company executives are expressing signs of jittery business confidence, he said. While fourth-quarter revenues were mostly positive, there were some slowdowns in growth. When there is slowdown in growth, executives will hold off on company expansion or taking other risks.

Although consumer confidence still has not made its comeback, Dhawan said vehicle sales are at a great level because of the deals on cars. Car sales will remain at strong levels this year, which will serve as an artificial boost to the economy, he said.

Home sales, on the other hand, are abysmal, Dhawan said. “Right now, I’m still worried about why people are not buying,” he said.

There is money sloshing around, though, and eventually it is going to show up in real-estate prices, whether it be in homes or hotels, he said.

As for the remainder of the year, the U.S. will continue to see a decent amount of job growth, Dhawan forecasted. Oil prices also will continue to rise, but will drop again in July after any problems with Iran are over.