Summer forecast good for US hotels

A
new study indicates that the American hotel industry will see improved
performance in three of its key measures this summer.

Increases
in occupancy, average daily rate and revenue per available room are forecast
for June, July and August, according to Smith Travel Research.

Occupancy
is expected to increase 4.3 per cent to 64.4 per cent and average daily rate
will increase slightly, by 0.1 per cent, to US$97.17.

Subsequently,
revenue per available room is forecast to increase 4.5 per cent, reaching
$62.60. Overall revenue will rise 6.3 per cent, said Brad Garner of the
research company.

“Demand
and average daily rate are both tracking positively. Average daily rate,
however, is hard to call due to recent events in the Gulf. It remains to be
seen how much demand will be re-accommodated and at what price or rate,” he
said.

Demand,
added the analyst, will go up 6.2 per cent but supply will increase by only 1.8
per cent.

Supply line

Hotel
development stateside is running significantly behind 2009, according to a
joint report by Smith Travel Research, Torto Wheaton Research and Dodge
Construction.

There
are 3,447 projects in construction, final planning and planning – a total of
364,612 new rooms but a 30.3 per cent drop on projects in the active pipeline
compared with May 2009. The biggest decrease was in the economy segment, which
fell by 64.1 per cent. Total room stock for the US hotel industry in May 2010
is 4,851,246.

Mark
Lomanno of STR said that recovery will be V-shaped in terms of demand, but
probably U-shaped in terms of average daily rate. Commenting on the recent NYU
International Hospitality Industry Investment Conference, he said that good
feelings abounded and that generally he felt that recovery was under way.

“One
observation I have made after looking at the last three downturns and
recoveries is that each hotel industry cycle seems more severe than the one
before, both on the way down and on the way up.

“Each
time, the industry’s pricing reaction to changing demand is not only more
immediate but also deeper and longer-lasting. On the flip side, the pricing
growth and acceleration during the recovery phase also exceeds prior recovery
cycles,” said Mr. Lomanno.

He
added that within months corporate travel negotiation season would be well
under way and that the hotel industry’s ability to successfully negotiate
higher rates would play a big role in average daily rate recovery.

BIZhotelsSTORY

Summer hotel occupancy is expected to increase in the US.
Photo: File

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