Hotel & Motel Management - September 18, 2007 - (Page 28)

28 Trends & Stats H&MM September 18, 2007 | HotelMotel.com www.HotelMotel.com/digital_edition Remainder of 2007 could surpass ﬁrst half IN THE details A look at the home stretch Growth below average Demand is rebounding Some segments outperform others Total United States occupancy and ADR — 12-month moving average - July 2007 110 100 90 80 70 60 50 Peak 64.6% July 1997 63.2% July 2007 Occupancy ADR ($) Peak $101.05 July 2007 By Mark Lomanno H&MM Columnist W ith a little more than half of 2007 now in the books, it is a good time to review industry performance so far and to anticipate what we might expect for the remainder of the year and early 2008. As expected, the rate of new room supply growth has accelerated somewhat over the past several years. But the rate of growth is still well below the long-term industry average of just over 2 percent per year. While we anticipate that the rate of net room-rate growth will continue to accelerate throughout the remainder of the year, we still believe that its impact on industry performance will be modest. A couple of new factors have emerged that will serve to help constrain the rate of new room supply growth. The ﬁrst is recent liquidity problems faced by a large segment of the lending community. Because the majority of ﬁnancial institutions are so broadly diversiﬁed, the fallout from the subprime mortgage ﬁasco ultimately might affect hotel lenders, resulting in a tightening of funds. If this happens, it almost certainly will serve to constrain new supply growth. The second reason also is related to the general real-estate environment. With the decline in the overall U.S. housing market, with condos being particularly hard hit, the trickle-down effect on hotels is likely to be dramatic. For the past several years, condo-hotels have been the darling of the development community. With condos being harder and harder to sell, projects that have, or anticipated having, a large private-ownership component might need to rethink their strategies. Conventional wisdom in recent years was that high-end hotel developments could not “pencil out” without some sort of ownership component. If that is indeed the case, then many of the planned projects are unlikely to come to fruition. While the immediate outlook for supply growth has gotten cloudy, net lodging demand has ﬁnally begun to rebound. A very sluggish demand growth picture during the second half of 2006 was followed by a disappointing ﬁrst quarter of this year. But since then, there has been signiﬁcant improvement in overall lodging demand numbers, with all indications pointing to a continuation for the remainder of the year. It also is encouraging that the acceleration in net demand growth has been evident from the business and leisure sides of the market. With the supply and demand patterns beginning to trend back in a very favorable direction for the hotel industry, we expect a stabilization in national room rate growth numbers at about the current levels of just over 5 percent. In addition, certain segments are doing even a bit better than this. If these performance patterns are maintained, the rest of the year could be better than the ﬁrst half of 2007. hmm@questex.com Mark V. Lomanno is president of Hendersonville, Tenn.-based Smith Travel Research. 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total United States — room supply/demand percent change 12-month moving average - 1989 to July 2007 6 4 2 0 -2 -4 -6 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 Supply % change Demand % change Total United States — occupancy/ADR percent change 12-month moving average - 1989 to July 2007 10 8 6 4 2 0 -2 -4 -6 -8 1989 1991 1993 Occ. % change ADR % change 1995 1997 1999 2001 2003 2005 2007 Total United States room rate percent change January 2003-July 2007 10 Total United States key performance indicators percent change — July YTD 10 2006 2007 7.5 5.7 5.4 8.9 5 5 1.2 1.2 0.9 1.3 -0.2 0 0 -0.2 -5 2003 2004 2005 2006 JFMAMJJ -5 Supply Demand Occupancy ADR RevPAR © 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 - September 18, 2007

Hotel & Motel Management - September 18, 2007 Contents Vista Inns Redefines Business Model Conley Applies Satisfaction Theory to Boutique Hotels Questex Acquires Oxford Publishing Perspective At Your Risk Consultant’s Corner Sales Clinic Travel Trends On Finance Franchise Law Cornell Insights HotelWorld Update Training Trends Satisfaction Trends Management Trends Speakers Named, Registration Open for IH/M&RS Going Green Saves Green Trends & Stats Vacuums Go the Extra Mile Transactions Offsetting Emissions is Newest Sustainability Initiative Minibar Advancements Supplier News People on The Move ADA Compliance Can Be Easier With Programs Business Travelers Interested in Remote Check-In/Out Awards Markets Dictate Renovations vs. New Builds More Development Opportunities Available Top Hotel Companies Survey The Lodging Conference Previews Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - September 18, 2007

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