STR Releases Updated Projections for 2009 and 2010

Vacation News » Vacation & Leisure Real Estate Edition | By Michael Gerrity | April 29, 2009 12:40 PM ET

(News Source: Smith Travel Research)

(HENDERSONVILLE, TN) -- STR projects a 9.8-percent year-over-year decline in revenue per available room for 2009, and it expects a 1.5-percent increase in 2010, according to the latest data released from the Hendersonville-based company.

A difficult environment resulted in a 17.7-percent RevPAR decline in the first quarter of 2009 and led to the company revising its forecast. STR expects the second quarter to continue to be challenging before the industry's performance slows its slide during the third and fourth quarters.

"With the first quarter of 2009 now behind us, it is clear that declining room rates are taking a harder toll on performance than we were expecting," said Mark Lomanno, president of STR. "It appears that many hoteliers are embracing the very same pricing and room distribution strategies implemented in the 2001/2002 downturn."

The U.S. hotel industry should see some relief toward the end of 2009, according to the projections released by STR. Occupancy at year-end 2009 is projected to be down 6.5 percent to 56.5 percent. At the end of first quarter 2009, the industry occupancy is down 10.9 percent to 51.4 percent. Average daily rate is projected to be down 3.6 percent to US$102.89. At end of first quarter 2009, ADR was at US$100.13, down 7.7 percent for the year.

"On a positive note, we believe the first two quarters of 2009 will be the lodging industry's trough in this cycle, and we will see some modest improvement in the third quarter followed by measurable gains in the fourth quarter, especially in occupancy," Lomanno continued.

The U.S. hotel industry projections for occupancy, ADR, and RevPAR are even more optimistic for 2010. Occupancy is projected to end the year flat at 56.5 percent, and ADR is projected to increase 1.5 percent to US$104.41.

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