More Guests in 2010 - But with a Catch
ATLANTA, Ga., August 13, 2009 � PKF Hospitality Research (PKF-HR) today
announced that, according to an advance release of the September 2009 edition
of Hotel Horizons®, nine consecutive quarters of declining lodging
demand will come to an end in the second quarter of 2010.
�With the budgeting process underway at hotels around the U.S., the
recovery of lodging demand is an important milestone that will be reached
in the year ahead,� said R. Mark Woodworth, president of PKF Hospitality
Research. �The catch; however, is that the practice of price discounting
has firmly taken hold, and, as a result, room rates are expected to decline
once again in 2010.�
Hotels that operate in the luxury, upscale, and midscale without Food
& Beverage segments are expected to more customers beginning to re-appear
in the fourth quarter of 2009. �While the price paid for the room
will remain the most important criteria for most travelers in 2010, the
value received will once again factor into the buying decision� Woodworth
noted. �Higher-priced hotels have suffered the greatest erosion in pricing
power during this protracted contraction and, as a result, offer an abnormally
strong value proposition as the industry begins to turn the corner mid-way
through 2010. We also believe that those property types that were
the best performers before the recession are going to be those leading
us out.� The two chain scales lagging the U.S. demand recovery will
be midscale with Food & Beverage and economy, which will not see improved
performance until the third quarter of 2010.
�Of the 50 markets monitored by PKF-HR, 45 will experience stronger
demand in 2010 than in 2009,� Woodworth added. �It is important to note,
however that supply increases are still an issue for hoteliers across the
U.S., as 25 of our 50 markets will report further declines in occupancy,
even with 20 of those 25 experiencing demand increases.� The five
lagging markets are Fort Lauderdale, Indianapolis, Miami, Tampa, and Washington,
D.C.
Budgeting Accuracy � What We Learned In 2002 & 2003
�During the two budgeting seasons following the post-9/11 period, every
forecast and prediction had the business environment improving in the �next�
quarter, regardless of whether that next quarter was the second quarter
of 2002, third quarter of 2002, or the fourth quarter of 2003. This
optimism led to budget shortfalls, which continued until 2005,� Woodworth
recounted. �Like times in our recent past, successful hotel owners and
operators must be prepared to anticipate additional declines in certain
metrics for 2010, which can be extremely difficult without guidance.
Hotel Horizons® can help by bringing some clarity to the future outlook.�
Hotel Horizons® is a series of econometrically derived forecast
reports developed by PKF Hospitality Research. The reports cover
50 of the largest U.S. hotel markets as well as the nation as a whole,
and six chain scales. Economic forecasts by Moody�s Economy.com and
historic hotel performance data and future supply pipeline information
from Smith Travel Research are used to construct the industry�s most comprehensive
forecasts of U.S. lodging market behavior.
Forecast Change in Key Metrics,
U.S. Lodging Industry
Year |
Occupancy |
ADR |
RevPAR |
Supply |
Demand |
2009 |
-9.0% |
-10.4% |
-18.5% |
3.0% |
-6.3% |
2010 |
0.4% |
-3.1% |
-2.7% |
1.2% |
1.6% |
Source: PKF Hospitality Research, September-November
2009 Edition of Hotel Horizons®
Introducing: myShareSM
Since it is budget season, owners and operators are thinking about
how their hotel will perform in 2010. Historically, the movement
in a hotel�s occupancy and average daily rate from year to year can be
largely explained by the movement of the overall market in which the property
sits. �Our research over the past 10 years reveals that seventy-five to
eighty percent of a hotel�s performance is systematically a function of
changes in the larger market in which the property is located,� notes John
B. (Jack) Corgel Ph.D., Senior Advisor to PKF Hospitality Research and
the Robert C. Baker Professor of Real Estate, Cornell University School
of Hotel Administration. �And who is better at knowing that remaining
twenty to twenty-five percent than the local property owner or operator?
The person in charge of the hotel knows when rooms will come in and out
of service, when renovations occur, and when competitors open across the
street.�
PKF Hospitality Research is introducing a new tool called myShareSM
which helps managers incorporate the current PKF-HR forecast for their
market into an estimate of the future performance of any submarket, competitive
set, or their hotel. Included as a complimentary addition to all
single market Hotel Horizons® reports, the myShareSM tool
is an Excel-based application that comes pre-loaded with the respective
Hotel Horizons® forecasts for all hotels, upper priced, and lower priced
properties within a defined geographic market, as well as historic
submarket data from which to assist the user in calibrating penetrations.
For more information, as well as a video demonstration of myShareSM,
go to www.pkfmyshare.com
To purchase Hotel Horizons® forecast reports for the United States,
or one of 50 individual markets, please visit the firm�s online store at
www.HotelHorizons.com, or call
(866) 842-8754.
PKF Hospitality Research (PKF-HR), headquartered in Atlanta, is the
research affiliate of PKF Consulting, a consulting and real estate firm
specializing in the hospitality industry. PKF Consulting has offices
in Boston, New York, Philadelphia, Washington DC, Atlanta, Miami, Indianapolis,
Houston, Dallas, Bozeman, Sacramento, Seattle, Los Angeles, and San Francisco. |