Hotel & Motel Management - July 21, 2008 - (Page 16)

16 Trends & Stats H&MM July 21, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Weekday travelers help drive healthy rate growth IN THE details Leisure travel drives decrease Business travel steady Weekend demand drops Room revenue increases Weekday demand share of total U.S. demand January 2001–April 2008 12-month moving average 70% By Jan Freitag H&MM Columnist A n important trend that we at Smith Travel Research have seen emerge is the stability of rate amid declining occupancy, particularly when looking at the U.S. hotel industry from a weekday vs. weekend business perspective. In fact, year to date, we cannot detect a slowdown at all—business travel seems to be holding steady. This is based on the encouraging performance of weekday demand. The majority of the travelers on the road during the week are probably traveling not because they want to but because they have to, i.e. they are on the road for business reasons. Numbers for year-to-date April indicate a fairly healthy increase in demand from Sunday through Thursday. The year-over-year change is almost 2.3 million roomnights, compared to just a halfmillion roomnight increase from 2006 to 2007. Furthermore, in the ﬁrst four months of 2007, the room demand we observed was 223.7 million roomnights sold on weekdays. As of 2008 YTD April, the number rose to 226 million roomnights, a 1-percentage-point change in demand. The weekend demand year to date is 94.3 million roomnights. However, we observed a steady drop in demand since 2006. Rooms sold dropped from 2006 to 2007 by more than a million roomnights and from 2007 to 2008 by 2 million, year to date. Since we deﬁne Friday and Saturday nights as the weekend, it is probably fair to assume that the leisure traveler is driving the decrease in demand. We assume that the weekend travelers are paying their own way, so it is safe to say that the larger macroeconomic picture is having an impact on the hotel industry. The tightening of the leisure traveler’s wallet is caused by higher gas prices, the housing credit crunch and less availability of credit, speciﬁcally from home equity loans. It is encouraging that weekday total room revenue increased from $23.4 billion for 2007 and is $24.8 billion for 2008 year to date. This suggests that not only are more people traveling, but at the same time the hotel industry was able toincrease room rates And this supports U.S. industry average daily rate growth as a whole. In addition, weekend room revenue also has increased. Despite the decrease in rooms sold, room revenue has increased from $9.6 billion in 2007 to $9.8 billion in 2008 year to date. This shows that fewer travelers are generating more revenue than in previous years with positive implications for total U.S. ADR growth. It will be interesting to follow the trend in ADR growth to see if decreases in demand will lead to further increases in rate or if operators will cut rates to induce additional leisure spending. hmm@questex.com Jan Freitag is vice president of Smith Travel Research (www.smithtravelresearch.com). 69% 68% 67% 2001 2003 2005 2007 Total U.S. weekday demand (millions of roomnights) April YTD 2006-2008 230 228 226 224 222 220 2006 2007 2008 223.2 223.7 226.0 Total U.S. weekend demand (millions of roomnights) April YTD 2006-2008 100 98 96 94.3 97.4 96.3 94 92 90 2006 2007 2008 Total U.S. weekend room revenue (billion $) April YTD 2006-2008 10.0 9.8 9.6 Total U.S. weekday room revenue (billion $) April YTD 2006-2008 26 24.8 24 23.4 9.5 9.3 22 21.9 9.0 2006 2007 2008 20 2006 2007 2008 © 2008 Smith Travel Research http://HotelMotel.com http://www.HotelMotel.com/digital_edition http://www.smithtravelresearch.com

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Contents Larkspur Hotels Branch Out with New Brand Starwood’s C.E.O. Maps Out Journey New Brand Leaders Share Hits, Misses Perspective Letters to the Editor Legal FAQ Training Trends Sales Clinic HotelWorld Update Trends & Stats Special Report: 2008 Construction Companies Survey Guest Column Events Technology: Telephones Hotel Operations: Building Exterior Design: Televisions Transactions Awards Hot Products: Mattresses Supplier News Ad/Edit Index Marketplace Classifieds Checking Out Hotel & Motel Management - July 21, 2008

Hotel & Motel Management - July 21, 2008

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