STR Predicts Good News in 2011

By OJ Robinson

As part of its monthly forecast program, STR (Smith Travel Research) is projecting the US Hotel industry will report increases in all three key metrics in 2011.

STR’s forecast projects 2011 occupancy to be up 2.4 percent to 56.2 percent, average daily rate to increase 3.0 percent to US$96.81, and revenue per available room to jump 5.5 percent to US$54.41.

“For the first time since 2007 occupancy will improve in 2011,” said Mark Lomanno, president of STR. “With that, we think that finally the industry will have the ability to raise room rates, though we think that it will be very mitigated ADR growth, about the 3 percent range. It won’t nearly come close to getting back to 2007 levels, but will at least be the beginning stages of improvement.

“We think that most of the construction pipeline will be built between now and 2011,” Lomanno continued. “We are looking for supply growth in 2011 to be about 0.8 percent.”

Demand for 2011 also is expected to end the year positive with a 3.2-percent increase.

STR’s revised forecast is expecting 2009 occupancy to end down 8.8 percent to 55.0 percent, ADR to drop 8.9 percent to US$97.30, and RevPAR to drop 17.0 percent to US$53.52.

“The current forecast predicts RevPAR to be down 17.1 percent for 2009,” Lomanno said. “Our latest revision modifies that slightly to 17 percent. Part of the reason for that is the ADR declines have plateaued and didn’t go down as far as we thought they might, which is a good thing.”

The outlook for 2010 looks slightly better than 2009, but still the industry is expected to end the year with decreases in all three key metrics. Occupancy is projected to end 2010 with a 0.2-percent decrease, ADR is forecasted to finish with a 3.4-percent drop off, and RevPAR is expected to close with a 3.6-percent decline.