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STR Updates 2009 / 10 U.S. Hotel Industry Forecasts

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As part of its new monthly forecast program, STR is projecting a 17.1% decrease in revenue per available room for the U.S. hotel industry in 2009. The company also revised its forecasts for the summer travel season, year-end 2009 and 2010.

STR’s forecast projects 2009 occupancy to be down 8.4% to 55.4% and 2009 ADR to decline 9.7% to US$96.37. It projects RevPAR to end 2009 at US$53.41.

“It is disappointing, surprising and a little bit sad,” said Mark Lomanno, STR president. “One of the things we felt like was that the industry would hold pricing more than it’s been able to. A lot of the commentary that we heard from the brands and the revenue managers is that they learned their lessons in 2001-2002, and they would be able to react better the next time around. For whatever reason, maybe because this downturn is so severe and so dramatic and so different than they were expecting, what they learned they weren’t able to apply.”

Despite hopes of a busy summer, the forecast indicates the usually robust season will not provide much relief for the industry. In year-over-year comparisons, occupancy is expected to be down 8.4% from June through August. ADR is predicted to decrease 10.4%, and RevPAR is projected to decline 18.7%.

The outlook for 2010 currently looks slightly better than 2009, but the industry is still expected to end 2010 with decreases in all three key metrics, and this could well worsen depending on what happens to the economy and the Swine Flu issue over the winter months. Occupancy is projected to end 2010 with a 0.3% decrease, ADR is forecasted to end 2010 with a 3.4% decrease, and RevPAR is expected to end 2010 with a 3.7% decline.

“The reality is it’s going to take that group business to get back for the industry’s fundamentals to start improving,” Lomanno said. “I don’t know how long it will take to get it back to the levels it was in 2006, 2007 and maybe the beginning of 2008. That’s going to need to get into a range that’s 90% to 95% of where it was before, which will generate transient demand, and then there will be some pricing power. On an inflation-adjusted basis, it’s probably going to be longer than six years before the rates get back to 2007 levels.”

“Absent some other event, it looks like we’re bouncing along the bottom. You’ve got to get to the bottom before you can start going up,” Lomanno added.

See other recent news regarding: Airlines, Aviation, Flights, First Class, Business Class, GDS, Miles, Hotels, Promotions, New Hotels, Visitor Arrivals, Cruises, Free Deals, STR, Forecast, MasterIndex, Performance, June 2009

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