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Following Two Years of Deep Discounting, U.S. Hotel Outlook Improving

By Lori Weisberg, The San Diego Union-Tribune
January 26, 2011

If last year’s statistics are correct, the lodging industry nationwide is undergoing a slow but steady recovery following a painful two years of deep discounting, slumping revenues and a growing inventory of distressed hotels.

Industry experts caution, however, that a return to the robust room rates in effect before the recession is still several years out.

“We’re making up a lot of ground, but we’re not where we should be,” Jan Freitag, of Smith Travel Research, told a packed ballroom of conference attendees at the annual Americas Lodging Investment Summit being held at the Hilton San Diego Bayfront.

The Hilton Bayfront San Diego (right) is the site of the Americas Lodging Investment Summit meeting here this week.

He pointed to year-end statistics that showed average room rates for the United States still under $100 a night — a modest 0.1 percent decrease from a year earlier and the second consecutive year room rates have declined. More encouraging news is the nearly 8 percent increase in demand, in large part a reflection of the slow-growing supply of new hotels being built.

“We won’t see that again,” Freitag said of the spike in demand.

The Top 25 lodging markets, which include the San Diego metro area, still are well below the peak demand periods, and the same is true for room rates, according to Smith Travel Research. Locally, for example, the average rate is $21 below the peak, exceeded only by Oahu at $22, Phoenix at $25 and New York City at $51, which happens to be enjoying one of the strongest recoveries in the nation.

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Lori Weisberg, Staff Writer
San Diego Union-Tribune
350 Camino de la Reina
San Diego, CA  92102

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