Recovery Ends - Peak Performance to Persist - PKF Forecasts Record Performance for U.S. Hotels
June 2, 2014 6:54am
June 2, 2014, Atlanta, Ga. – According to the recently released June 2014 edition of PKF Hospitality Research, LLC’s (PKF-HR) Hotel Horizons® forecast report, the U.S. lodging industry will achieve an occupancy level of 63.6 percent in 2014, topping the pre-recession peak of 63.1 percent reported by STR, Inc. (STR) in 2006. Given this favorable balance between supply and demand, R. Mark Woodworth, president of PKF-HR predicts that hotel owners and operators will begin to see real (inflation adjusted) recoveries in average daily rates (ADR) and net operating income (NOI).
“The domestic hotel industry is operating at peak performance. We can stop using the term ‘recovery,’” said Woodworth. “The U.S. lodging industry is at a place in the business cycle where a confluence of market and operational factors will lead to impressive performance on both the top- and bottom-line. In 2014 and 2015, our firm is forecasting several all-time highs for some of the most important metrics in the hotel business.
By year-end 2015, PKF-HR projects that the U.S. lodging industry will have achieved the following milestones:
“Most everyone is enjoying the benefits of life in the sweet spot. However, it is natural for people to begin to worry about their ability to sustain such peak performance,” Woodworth stated.
An Absence of Obstacles
To assess how long the U.S. lodging industry will be able to maintain the current elevated levels of operating performance, PKF-HR examined the factors that derailed industry performance in the past.
“A review of past lodging cycles reveals that five events, either on their own or in some combination, have brought an end to the good times,” said John B. (Jack) Corgel, PhD., the Robert C. Baker professor of real estate at the Cornell University School of Hotel Administration and senior advisor to PKF-HR. “Fortunately, some of the factors that have historically triggered the turning point at which cyclical declines commence appear benign, while other factors are entirely unexpected.”
An analysis of these phenomena, along with an assessment of the prospects for their near-term recurrence, follows:
“The one detrimental factor we cannot anticipate is an unpredictable demand shock,” Woodworth said. “The events of September 11, 2001 and the depth of the Great Recession clearly demonstrated that the impact of these types of phenomena on lodging demand and operating profits occurs quickly and can be devastating.”
Reap the Benefits
“We have enough experience and data to know that the hotel industry is a cyclical business. However, at this time in the cycle, our forecasts have proven to be most accurate, and all we see for the foreseeable future is a period of persistent, positive performance. This consistent, predictable and profitable environment offers all industry participants ample opportunities to make money during the next few years,” concluded Woodworth.
To purchase a June 2014 Hotel Horizons® report, please visit www.hotelhorizons.com. Reports are available for each of 55 major metropolitan areas in the U.S., and contain five year projections of supply, demand, occupancy, ADR, and RevPAR.
pkf hospitality research,
Contact: R. Mark Woodworth
404 809 3969
Contact: for media: Chris Daly,
Daly Gray Public Relations
703 435 6293
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