STR releases 2008, 2009, 2010 projections
Smith Travel Research released its revised 2008 and 2009 forecasts and its projections for the U.S. hotel industry's performance in 2010.
'We look for things to get tougher before they get better,' said Randy Smith, CEO of STR. 'We've had an entire year in which we've had a cheap dollar fuelling more international visitors, and New York to date has had another good year. We expect those two things to level, so two of the things that have been good for the U.S. lodging industry aren't going to be there in the foreseeable future.'
The revised 2008 forecast includes the following:
• a 3.0-percent drop in occupancy from year-end 2007 to 61.2 percent,
• a 3.4-percent increase in average daily rate average from year-end 2007 to $107.44,
• a 0.4-percent increase in revenue per available room from year-end 2007 to $65.75, and
• a 2.5-percent increase in supply and a 0.5-percent decrease in demand.
Mark Lomanno, president of STR, said one encouraging sign for the industry is that despite the turbulent economic environment expected for the next two years, ADR growth should remain in positive territory.
'What is different this time than with the last two downturns is hotel operators are less inclined to give rate away,' Lomanno said. 'They have learned that holding rate is important for their business in both the short- and long-term.'
For 2009, STR projects:
• a 3.5-percent year-over-year decline in occupancy to 59.1 percent-the lowest level since 2003, when it was 59.2 percent,
• a 1.0-percent year-over-year increase in ADR to an all-time industry best of $108.52,
• a 2.5-percent year-over-year decline in RevPAR to $64.10.
• a 2.4-percent year-over-year increase in supply and a 1.0-percent decrease in demand.
Smith said that on the development front, the opposite of what occurred during 2008 will happen during 2009.
'In 2008, the increases in supply built to a crescendo as the year went on,' Smith said. 'The deeper we get into 2009, the fewer new hotel rooms we will see enter the industry.'
Lomanno said development pipeline attrition will be higher than normal-even with projects that have broken ground-because of the continued tightness in the financial markets.
For 2010, STR projects:
• a 0.6-percent year-over-year decline in occupancy to 58.7 percent,
• a 2.1-percent year-over-year increase in ADR to a record $110.80,
• a 1.5-percent year-over-year increase in RevPAR to $65.06, and
• a 1.2-percent increase in supply and a 0.6-percent increase in demand.
About STR & STR Global
For more than 20 years, Smith Travel Research has been the recognized leader for lodging industry benchmarking and research. Smith Travel Research and STR Global offer monthly, weekly, and daily STAR benchmarking reports to more than 36,000 hotel clients, representing nearly 5 million rooms worldwide. STR is headquartered in Hendersonville, Tenn., and STR Global is based in London. For more information, visit www.smithtravelresearch.com or www.strglobal.com.
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