U.S. Hotel Market Occupancy Rates to Increase 1.9% by Year-end, Says STR

Commercial News » Commercial Real Estate Edition | By Michael Gerrity | April 8, 2010 11:05 AM ET

According to Smith Travel Research's (STR) monthly forecast update, the U.S. hotel industry is expected to end 2010 with stronger performance in all three key measurements than previously predicted.

STR predicts 2010 occupancy to increase 1.9 percent to 55.8 percent, average daily rate to decrease 2.3 percent to US$95.45, and revenue per available room to end the year virtually flat with a 0.5-percent decrease to US$53.22.

Supply in 2010 is projected to grow 2.2 percent and demand is expected to rise 4.1 percent.

"We think the recovery will pick up its pace during the second and third quarters of this year, then it will moderate," said Mark Lomanno, STR's president.

The forecast for 2011 predicts the industry to end the year with increases in all three key performance metrics: Occupancy will increase 1.9 percent to 56.8 percent; ADR will rise 3.5 percent to US$98.79; and RevPAR will be up 5.4 percent to US$56.12.

Supply in 2011 is projected to be up 1.0 percent and demand is expected to increase 2.9 percent.

"The takeaway is that 2010 is going to be significantly better than (hoteliers) thought it would be, and they plan their strategies accordingly," Lomanno continued. "It won't be back to 2007 or 2008 levels, and there will be easy (comparisons to last year). 2011 will be a good year on top of a good year, and that is something we haven't seen in awhile."

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