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  • Hotel room demand, rates to remain low in 2010

    Forecast calls for a 3.4% decline in average daily hotel room rates

    Susan Avery -- Purchasing, 10/14/2009 1:14:54 PM

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    Smith Travel Research's 2010 forecast for hotel room supply and demand looks slightly better for hoteliers than 2009, but the industry still is expected to end the year with decreases in three key metrics. Occupancy is projected to slide again in 2010 by 0.6% to 55.1%, while ADR (average daily rate) is forecast to decline 3.4% to $93.16, and RevPAR (revenue per available room) is expected fall 4% to $51.29.

    That's on top of the STR's projections for 2009: an increase in supply of 3% and a drop of 5.5% in demand. STR's forecast projects 2009 hotel occupancy to be down 8.4% to 55.4%, ADR to decline 9.7% to $96.43, and RevPAR to end with a 17.1% decrease to $53.43.

    Corporate travel buyers refer to these key hotel industry metrics when preparing for negotiations with hoteliers for the upcoming year. Typically, negotiations take place in fall, with new rates set to go into effect on January 1. 

    "As we close the summer travel season and move into the fourth quarter, there are pressing questions that will be answered in the coming months," said Chad Church, industry research manager at STR in Hendersonville, Tenn.

    "Depending on the initial indications of performance during the conference season, we'll revise our 2010 outlook if necessary," he said. "As of now, we stand at the revenue per available room projection of a 4.2% decrease in 2010. While we do have a bias to improve our RevPAR target for 2010, our wait-and-see approach will provide us with more discernable data, especially in the average-daily-rate portion of the equation."

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