Mixed summer season predicted for US hotels

According to
Smith Travel Research, the summer travel season will show mixed returns in the
American hotel industry.

The research
company predicted that June, July and August 2010 would show an increase in occupancy
of 2.2 per cent compared to the same period in 2009, reaching 63.1 per cent
occupancy this time around. Average daily rate, however, is mooted to decrease
1.9 per cent to $95.16.

The effect of
these two statistics on revenue per available room, or RevPAR, is a very minor
increase of 0.2 per cent. RevPAR is calculated by multiplying occupancy percentage
by the average daily rate and is a key metric of measurement for the hotel industry.

Demand is
expected to rise by 4.4 per cent compared with a 6.2 per cent decrease in
summer 2009. Supply this year will go up 2.1 per cent, in comparison to a 3.2
per cent increase last year. According to STR, revenue for the summer will go
up 2.3 per cent to $26.9 billion. Last year’s summer results showed a decrease
of 15.2 per cent to $26.3 billion.

Strongest

July is
anticipated to show the strongest occupancy of 64.4 per cent with RevPAR of
$61.14, said Brad Garner of STR.

“While demand
for hotels this summer will be brisk and will continue to provide positive
recovery momentum, rate growth remains a concern.

“Conditioned
and value conscious consumers will not be reaching as deep into their wallets
as in previous summer seasons. We anticipate flat to slightly negative rate
growth this summer,” Mr. Garner said.

There are
3,512 hotel development projects in the pipeline with a total of 367,080 rooms,
according to a joint report between STR, Torto Wheaton Research and Dodge
Construction. This is a 31.2 per cent decrease in active pipeline rooms
compared to April, 2009. This data includes rooms in construction, final
planning and planning but not projects that are in the pre-planning stage.

The biggest
decrease was economy rooms, the amount of which in the pipeline fell by 62.2
per cent to 6,627 rooms. Luxury rooms went down by 50 per cent to 5,424 rooms
and upper upscale down by 40.6 per cent.

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