Ahead of the Bell: Some hotel price targets cut

The sector has been pressured as consumers tighten spending due to the housing slowdown, rising food costs, deteriorating credit and recession fears.

C. Patrick Scholes of FBR Capital Markets said in a client note that new hotel bookings improved from September to October, but the increasing use of rate cuts to secure bookings is leading to weakened business, as less money is coming in from each room.

The analyst expects fourth-quarter revenue per available room to be worse than expected, and predicts that companies such as Marriott International Inc., Host Hotels & Resorts Inc. and LaSalle Hotel Properties may miss their quarterly earnings outlooks.

Revenue per available room, also known as revpar, is a key gauge of a lodging company's performance.

Scholes also said that high-end hotels may suffer more than economy or mid-level brands, as companies scale back on travel budgets.

"Our view is that budget-conscious business travelers are selecting midscale and economy hotels versus upper-upscale properties," he wrote.

Scholes reduced Marriott's price target to $24 from $29 and cut Host's to $7 from $8. The analyst also trimmed LaSalle's price target to $9 from $10.