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STR Revises US Hotel Industry Projections

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STR is projecting the U.S. hotel industry to report increases in all three key metrics in 2011. STR's revised forecast now projects 2011 occupancy to be up 2.4% to 56.2%, ADR to increase 3% to US$96.81, and RevPAR to jump 5.5% to US$54.41.

"For the first time since 2007 occupancy will improve in 2011," said Mark Lomanno, president of STR. "With that, we think that finally the industry will have the ability to raise room rates, though we think that it will be very mitigated ADR growth, about the 3% range. It won't nearly come close to getting back to 2007 levels, but will at least be the beginning stages of improvement."

"We think that most of the construction pipeline will be built between now and 2011," Lomanno added. "We are looking for supply growth in 2011 to be about 0.8%."

Demand for 2011 is also expected to end the year positive with a 3.2% increase.

STR's revised forecast is expecting 2009 occupancy to end down 8.8% to 55%, ADR to drop 8.9% to US$97.30, and RevPAR to drop 17% to US$53.52.

"The current forecast predicts RevPAR to be down 17.1% for 2009," Lomanno said. "Our latest revision modifies that slightly to 17%. Part of the reason for that is the ADR declines have plateaued and didn't go down as far as we thought they might, which is a good thing."

The outlook for 2010 looks slightly better than 2009, but still the industry is expected to end the year with decreases in all three key metrics. Occupancy is projected to end 2010 with a 0.2% decrease, ADR is forecasted to finish with a 3.4% drop off, and RevPAR is expected to close with a 3.6% decline.

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