Hotel room rates set to rise
Occupancy pickup also expected in 2010
Susan Avery -- Purchasing, 11/24/2009 2:45:52 PM
As the economy recovers and travelers take to the road once again, travel buyers can expect hotel room rates to start inching up.
Smith Travel Research projects 2011 occupancy to be up 2.4% to 56.2%, average daily rate (ADR) to increase 3% to $96.81 and revenue per available room (RevPAR) to jump 5.5% to $54.41.
"For the first time since 2007, occupancy will improve in 2011, says Mark Lomanno, president of STR in Hendersonville, Tenn. "With that, we think that finally the industry will have the ability to raise room rates...It won't nearly come close to getting back to 2007 levels, but will at least be the beginning stages of improvement."
Lomanno adds that most of the construction pipeline will be built between now and 2011, with supply growth in 2011 to be about 0.8%. Demand, too, will end the year on a positive note, with a 3.2% increase.
STR's revised forecast for 2009 is for occupancy to end down 8.8% at 55%, ADR to drop 8.9% to $97.30 and RevPAR to drip 17% to $53.52.
The outlook for 2010 looks slightly better, 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.
Travel buyers refer to these metrics when negotiating hotel room rates and other contract terms with hoteliers for the upcoming year. Typically, negotiations take place in the fall, with new rates going into effect on Jan. 1.
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