Hotel & Motel Management - September 15, 2008 - (Page 26)

26 Trends & Stats H&MM September 15, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Midscale segments see decrease in occupancy IN THE details F&B lags behind counterpart Occupancy and ADR Demand in each segment RevPAR stays positive Total United States rooms in construction by scale in thousands June 2008 60 51.6 59.3 50 40 30 20 10 0 Luxury Upperupscale Upscale 6.9 9.8 10.6 23.4 43.0 change for almost the last 10 years, we can see that occupancy percent change has been negative except for the period of 2004-2007. At the same time, ADR continues to increase stronger than the rate of inﬂation at a positive growth rate of 4 percent. By Jan Freitag H&MM Columnist Midscale without F&B The decrease in occupancy is as pronounced in midscale without F&B as it is for its counterpart, but the reasons for decreases are different. A strong increase in demand (1.9 percent) in the ﬁrst half of 2008 indicates that the traveler is voting with his or her wallet. Despite the demand increase, occupancy is dropping this year (-3 percent) due to the increase in new supply (5 percent), which has more than absorbed the increases in rooms sold. Yet because of the demand increase, properties are able to raise rates well above the level of inﬂation. Unfortunately—but not unexpectedly—the strong increases in ADR that we observed throughout the last couple of years are not sustainable in the long run. But because increases in demand in this segment seem to hold, we expect positive RevPAR growth for the future as well. With short construction time and favorable economics, the number of rooms in construction outpaces every other scale that we report on with a total of 59,300 guestrooms in the midscale-withoutF&B segment pipeline. On the contrary, the decline in demand and the unfavorable perception of hotels run with F&B continues to dampen the new construction of midscalewith-F&B hotels—the construction pipeline has less than 10,000 guestrooms. hmm@questex.com Jan Freitag is vice president of Smith Travel Research (www.smithtravelresearch.com). Midscale Midscale Economy Unafﬁliated w/F&B w/o F&B Midscale-with-F&B chains key performance indicators June YTD 10 2007 2008 mith Travel Research breaks the midscale category into two distinct groups: midscale with food and beverage and midscale without food and beverage. A quick glance at occupancy and rate for the ﬁrst half of 2008 shows that midscale with F&B lags behind midscale without F&B—56.4-percent occupancy vs. 63.6-percent occupancy and $87.58 average daily rate vs. $89.92. S 3.7 4.2 2.9 0 0 -0.8 -2.1 -2.5 -2.9 -4.1 -6.5 -10 Supply Demand Occupancy ADR RevPAR Midscale with F&B For hotels in the midscale-with-F&B chain scale, there has been a distinct drop in demand—the largest drop across all chain scales. For June year to date, demand growth is negative at a rate of 6.5 percent. This is compounded on the same period in 2007, which saw a decrease in growth of 2.9 percent. The decrease in occupancy is mitigated by the decrease in supply. Interestingly, these hotels still are able to increase rate above the level of inﬂation (which is about 3.7 percent right now). As the chart shows, however, revenue per available room growth has been completely wiped out by the decrease in occupancy in the ﬁrst six months of the year. Looking at occupancy and ADR Midscale-without-F&B chains key performance indicators June YTD 10 7.3 6.1 5.0 3.8 2.7 1.9 4.5 1.4 2007 2008 5 0 -1.1 -3.0 -5 Supply Demand Occupancy ADR RevPAR Midscale-without-F&B chains occupancy/ADR percent change 12-month moving average to June 2008 10 8 6 4 2 0 -2 -4 -6 ADR % change Occupany % change Midscale-with-F&B chains occupancy/ADR percent change 12-month moving average to June 2008 8 6 4 2 0 -2 -4 -6 -8 -10 ADR % change Occupany % change 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 © 2008 Smith Travel Research http://HotelMotel.com http://www.HotelMotel.com/digital_edition http://www.smithtravelresearch.com

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Hotel & Motel Management - September 15, 2008 Contents Microtel, Hawthorn Settle in at Wyndham Is it Black or Red for Green Hotels? New City on the Strip When in Doubt, Purchase some Seashells Legal FAQ Consultant's Corner Sales Clinic On Finance Travel Trends Franchise Law Guest Column Events Cornell Insights HotelWorld Update Trends & Stats Top Hotel Companies Survey Awards Lending Requires Knowledge, Preparation Casegoods Minibars Historian to Keynote Leadership Forum at IH/M&RS Fitness Equipment The Lodging Conference Preview Accent Lighting Awards Vacuums Supplier News Transactions People Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - September 15, 2008

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