Hotel & Motel Management - May 5, 2008 - (Page 20)

20 Trends & Stats H&MM May 5, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Industry remains strong IN THE details Operators must maintain ADR Numbers outpace average Supply growing Leisure hotels take a hit Total U.S. key performance indicators—percent change February YTD 12 2006 2007 2008 21 Year Avg. By Bobby Bowers H&MM Columnist A s 2008 unfolds, ﬁgures collected from Smith Travel Research’s database indicate that the lodging industry is weathering the barrage of not-so-bright news from the country’s ﬁnancial sector—and it will continue to do so if hotel operators remain steadfast in maintaining average daily rates. The sky isn’t falling on the hotel industry. ADR growth appears to be slowing after several years of robust increases, but it remains in positive territory. Through February, ﬁgures for the U.S. lodging industry have remained strong. Year-to-date ADR growth decreased from 2007, but it has outpaced the 21-year average by a healthy margin. Occupancy-rate growth followed the trend created in 2007 and slipped during the ﬁrst two months of 2008. Revenue per available room growth dropped from its 2007 position—which was well below 2006 performance—but remained in line with the 21-year average. ADR growth remained strong during the ﬁrst two months of 2008 as each of the six chain-scale segments posted increases. The midscale-without-food-andbeverage, the midscale-with-F&B and the luxury segments led the pack in ADR rate growth. Meanwhile, each of the chainscale segments saw a drop in occupancyrate growth—ranging from a 0.6-percent decline in the upper-upscale segment to a 2.8-percent drop in the midscale-withF&B segment. Directly affecting ADR and occupancy rate is the supply-growth rate, which is on the upswing. During the past three to ﬁve years, minimal supply growth put the industry in a better position to absorb it. Now, a 2.1-percent forecasted increase in supply and the slowing economy will make hotels hard-pressed to fend off new competition while holding their rates— especially considering that the forecasted 1.4-percent growth in demand during 2008 will affect their occupancy rates. Demand numbers have softened steadily during the past year, and it appears that 2008 will be an up-and-down year for demand growth. Bigger markets seem to be faring better up to this point. The segments at the lower end of the market, which are more leisure-oriented hotels, seem to be hit a little harder than higher-end properties. That’s the reverse of what happened during the last downturn, which began in early 2001. Also, this time around, weekend performances are feeling more pressure than weekday performances. As the accompanying charts indicate, the downturn of 2001 produced a much steeper drop in the rate of growth in ADR and demand, even before 9/11. This slowdown doesn’t indicate a steep drop. Leisure business seems to be tapering, but corporate business appears to remain strong. There have been minimal cancellations of room blocks by large groups, which could mean it’s business as usual for corporate business. All of these fundamentals point toward RevPAR growth of about 3.5 percent to 4.5 percent. hmm@questex.com Bobby Bowers is senior vice president of operations for Hendersonville, Tenn.-based Smith Travel Research. 10.5 8 7.3 6.5 5.0 4.7 3.4 3.4 3.4 4 3.0 0 -1.7 -1.4 -0.1 -4 Occupancy ADR RevPAR Total U.S. monthly room supply—percent change January 2003 – February 2008 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 2003 2004 2005 2006 2007 2008 Chain scales occupancy/ADR—percent change February YTD 2008 10 Occupancy ADR 5.7 5 4.6 3.8 4.1 4.7 2.5 0 -0.7 -0.6 -1.9 -2.8 -1.7 -2.6 -5 Luxury Upperupscale Upscale Midscale w/ F&B Midscale w/o F&B Economy Total U.S. ADR percent change Twelve-month moving average—Pre-9/11 vs. end of 2006 8 6 4 2 0 -2 -4 9/11 Total U.S. room demand percent change Twelve-month moving average—Pre-9/11 vs. end of 2006 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6 9/11 -6 2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008 © 2007 Smith Travel Research http://HotelMotel.com http://www.HotelMotel.com/digital_edition

Table of Contents Feed for the Digital Edition of Hotel & Motel Management - May 5, 2008

Hotel & Motel Management - May 5, 2008 Contents Pipeline Favors Established Companies 3 Palms Debuts in Upscale Tier Guests Want Reward Options Perspective Legally Speaking Marketing Matters Consultant’s Corner On Finance What Women Want Maintenance Doctor Trends & Stats Special Report: Top Hotel Brokers Design: Tune Into Music Programs Hot Products: PTACs On the Block: Silver Lining in Bleak Hotel Sales Market Events Transactions Supplier News Consumer Insight: The Importance of Creature Comforts When Traveling Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - May 5, 2008

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