Friday, October 26, 2012
Positive trends continued through Sept. and the future appears bright for the hotel industry
It's mid-October and fall is definitely here. Turning leaves bring out "leaf peepers" while leisure and business travel is hitting its peak. For many, the only solace of saying goodbye to warm, sunny days and the onset of cold, dark winter ones are glorious autumn afternoons. Personally, without fall weather (and the start of football season), the thought of freezing temperatures and 4:45 PM sunsets would send me into a deep dive. Fortunately, for the hotel industry, positive trends continued through September and the future appears bright.
I recently attended The Lodging Conference in Phoenix. The conference set a new attendance record with over 1,400 attendees from across the US and overseas. The four day event is one of the marquee events for our industry, attracting representatives from all market segments including owners/investors, brands, operators, consultants and service providers and vendors from every discipline. Throughout the week the mood felt "cautiously optimistic". Demand is up, supply is low and average daily rates (ADR) are on the rise. So, with positive dynamics at work why do hoteliers remain cautious?
The clouds of political and economic uncertainty, both domestic and international, are keeping widespread optimism in check. The conference opened with a panel of experts discussing the current state of the hotel market, where we are going and how macroeconomic factors could influence future performance. Vail Brown of Smith Travel Research (STR) commented that the US hotel industry set an all-time high in room revenue, over $78 million, through August. In addition, demand has exceeded room supply for 25 consecutive months and through the end of this year demand will continue to grow at about 2%. Finally, the numbers show that occupancy recently returned to pre-recession levels but ADR continues to lag. The opportunity for hotels owners and operators to increase profitability lies in ADR, not occupancy.
View the full PDF here.