STR: Key U.S. indicators to rise in 2011

HENDERSONVILLE, Tennessee—As part of its monthly forecast program, STR is projecting the U.S. hotel industry will report increases in all three key metrics in 2011.

STR’s forecast projects 2011 occupancy to be up 2.4 per cent to 56.2 per cent, average daily rate to increase 3.0 per cent to US$96.81, and revenue per available room to jump 5.5 per cent to US$54.41.

“For the first time since 2007 occupancy will improve in 2011,” said Mark Lomanno, president of STR. “With that, we think that finally the industry will have the ability to raise room rates, though we think that it will be very mitigated ADR growth, about the 3 per cent range. It won’t nearly come close to getting back to 2007 levels, but will at least be the beginning stages of improvement.

Source: Smith Travel Research

“We think that most of the construction pipeline will be built between now and 2011,” Lomanno continued. “We are looking for supply growth in 2011 to be about 0.8 per cent.”

Demand for 2011 also is expected to end the year positive with a 3.2-per cent increase.
 
STR’s revised forecast is expecting 2009 occupancy to end down 8.8 per cent to 55.0 per cent, ADR to drop 8.9 per cent to US$97.30, and RevPAR to drop 17.0 per cent to US$53.52.

“The current forecast predicts RevPAR to be down 17.1 per cent for 2009,” Lomanno said. “Our latest revision modifies that slightly to 17 per cent. Part of the reason for that is the ADR declines have plateaued and didn’t go down as far as we thought they might, which is a good thing.”

Source: Smith Travel Research

The outlook for 2010 looks slightly better than 2009, 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-per cent decrease, ADR is forecasted to finish with a 3.4-per cent drop off, and RevPAR is expected to close with a 3.6-per cent decline.

October 2009 select Canadian markets

October 2009 select Canadian markets -- Source: HVS International