CPN - September 2008 - (Page 8) HOSPITALITY MARKET INTELLIGENCE Slow Traffic Ahead Lack of Travelers Threatens Hotel Performance By Eugene Gilligan his year may turn out OK for the hotel sector, thanks in part to business travel. But 2009 may tell a different tale. According to Smith Travel Research, RevPAR in 25 major U.S. markets increased 3.2 percent from the first five months of 2007 to the same period a year later, growing from $86.74 to $89.48. RevPAR in all other markets rose 1.6 percent, from $52.59 to $53.41. Business travel has held up this year, according to Bjorn Hanson, associate professor in New York University’s Tisch Center for Hospitality, Tourism and Sports Management. That bodes well for the remainder of 2008, as business accounts for 60 percent of post-Labor Day travel spending. Current group and convention room rates,many of them negotiated in 2006 and when strong occupancy still gave hotels the upper hand, are also healthy. T real estate research analyst for Robert W. Baird & Co.“But we can expect things to get substantially worse.” However, he cautioned, the influx of travelers from Europe could decrease substantially if their economies slow down, said Robert Mandelbaum, director of research information services for PKF Hospitality Research.And Hanson noted that forecasts stating that the U.S. economy would rebound in the second half of this year have proved wrong. “The prediction was that we would start to see recovery in the credit markets and that the worst in the housing market and foreclosures would be over,” he said. SHORT-LIVED IMPROVEMENT? One statistic rings a particularly loud (RevPAR, January to May 2008) alarm. Hotel occupancy for the weekPercent 2007 2008 Change end following July 4, which landed on a Boston $85.82 $92.10 7.3% Friday this year,came in 7 percent lower than last year, when the holiday fell on a Los Angeles-Long Beach $91.09 $93.77 2.9% Continued on page 15 ® New York City $192.03 $207 7.8% Washington, D.C.-Md.-Va. $105.71 Source: Smith Travel Research And foreign travelers to the United States rose 15 percent during the first quarter, according to the Department of Commerce. That benefits gateway cities like San Francisco and Boston, said Smith Travel Research president Mark Lomanno. “Things have held up pretty well so far,” said David Loeb, managing director & senior $107.88 2.1% Visit www.cpnonline.com/newsletter to subscribe to CPN’s technology e-newsletter. EACH SUSPENSION ROD ON THE BROOKLYN BRIDGE CAN HOLD 11,200 TONS DON’T YOU WISH YOUR LENDER OFFERED THAT KIND OF SUPPORT? When it comes to your deal, trust Prudential Mortgage Capital Company to handle everything from the heavy lifting to the fine details. You’ll have access to a seasoned team of industry veterans, with the experience to guide you every step of the way. And, the financial strength and resources of The Rock® give us the power to tackle any financing challenge. Prudential Mortgage Capital. The total support you need to do business with confidence. FOR MORE INFORMATION CONTACT PRUDENTIAL MORTGAGE CAPITAL 1-888-263-6800 © 2008. Prudential Financial. www.prumortgagecapital.com 8 COMMERCIAL PROPERTY NEWs • September 2008 • www.cpnonline.com http://www.cpnonline.com/newsletter http://www.prumortgagecapital.com http://www.prumortgagecapital.com http://www.cpnonline.com
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