Hotel & Motel Management - October 15, 2007 - (Page 18)

18 Trends & Stats H&MM October 15, 2007 | HotelMotel.com www.HotelMotel.com/digital_edition Better balance of brand mix drives room supply IN THE details Room conversions Number of rooms up 50 percent Lodging demand increased Brand conversion of rooms has impact Total U.S. Supply - 1987 vs. 2007 rooms available 1500 1987 2007 1469.2 1378.2 By Mark Lomanno H&MM Columnist n the past 20 years, the size and structure of the United States lodging industry has changed dramatically. Those changes have occurred as a result of a massive overall addition to room supply as well as the tendency of many lodging properties to change brand afﬁliation. Since 1987 the total number of hotel rooms in the U.S. has grown by approximately 1.5 million, a 50 percent increase, to just less than 4.5 million rooms today. While that growth has certainly been dramatic, so has the increase in lodging demand as, on average, in 2007 more rooms are sold every day than existed in total supply 20 years ago. While the overall growth in the size of the industry has certainly been unprecedented, so have the changes that have occurred in the types of hotel rooms available to the guest. In 1987 independent hotels and midscale hotels with food and beverage dominated the industry. In fact, 20 years ago these two segments represented just less than twothirds of all rooms available in the U.S. Today, those two segments represent less than one-half of the U.S. room supply, at fewer than 45 percent of all rooms. I Today, the industry overall mix is much more balanced with less than one-third of the rooms in independent properties and the remaining twothirds relatively balanced between ﬁve of the six Smith Travel Research chain scale segments. The only segment that remains much smaller than the others is luxury, which obviously caters to the most focused segment of travelers. Over the past 20 years, the most dramatic growth in absolute number of rooms and share of total supply has been midscale-without-F&B and upscale hotels. This is especially true of the midscale without F&B segment, which was relatively new in 1987, with less than 3 percent of total rooms at that time, to just fewer than 16 percent of all rooms today. During this time, this segment has added more than 600,000 rooms, which, in net terms, means that approximately 40 percent of all new rooms added since 1987 have been in this segment. While the tendency is to associate room supply changes with new construction, two other factors play into the ﬁnal room supply numbers, room closures and conversions from one brand to another. Interestingly, the number of rooms that have closed over the past 20 years—more than 715,000—has somewhat served to understate the level of new construction. In the last 20 years, the number of rooms built has exceeded 2.3 million, which means that more than 50 percent of the current room supply has been built during that time period. hmm@questex.com Mark V. Lomanno is president of Hendersonville, Tenn.-based Smith Travel Research. 1000 636.1 550.5 707.3 527.7 415.5 749.9 500 79.4 413.8 369.0 112.3 37.3 106.2 0 Luxury Upperupscale Upscale Midscale w/F&B Midscale w/o F&B Economy Independent Total new construction (in thousands) - 1987 through August 2007 700 600 500 408.8 Rooms built 610.5 541.3 400 300 216.9 307.7 180.4 200 100 0 45.7 Luxury Upperupscale Upscale Midscale w/F&B Midscale w/o F&B Economy Independent Total room closings (in thousands) - 1987 through August 2007 500 Rooms closed 445.6 400 300 200 100 9.0 91.5 40.7 20.8 19.9 86.4 0 Luxury Upperupscale Upscale Midscale w/F&B Midscale w/o F&B Economy Independent Total U.S. - Average 20-year activity - 1987 through 2007 New construction, closings and conversions 200 150 100 50 0 20-year average 158.1 Net room conversions (in thousands) - 1987 through August 2007 100 54.6 32.1 9.1 30.8 33.0 12.9 0 79.8 -100 35.7 Net Rooms conversions -200 -173.6 Openings Closings Conversions Luxury Upperupscale Upscale Midscale w/F&B Midscale w/o F&B Economy Independent © 2007 Smith Travel Research http://HotelMotel.com http://www.HotelMotel.com/digital_edition

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Hotel & Motel Management - October 15, 2007 Contents Concord Sets Goal to Double Portfolio Leaders: Budgetel Brand Off and Running Pension Funds Put More Capital Into Hotels Perspective Letter to the Editor At Your Risk Consultant's Corner Sales Clinic On Finance Guest Column Trends & Stats Industry Leaders Say Healthy Times Will Continue Eco-Concious Hotels Looks for Certification Events Removing Chemicals, Suds from Housekeeping Products Handhelds Help Track Safe Activity People on The Move Awards Transactions Supplier News Ad/Editorial Index Bath Trends Marketplace Classifieds Checking Out

Hotel & Motel Management - October 15, 2007

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