Positive News for US Hotels: 2011 Performance, 2012 Forecast

So, did you hear the good news? The U.S. hotel industry reported increases in all three key performance metrics in 2011, according to data from Smith Travel Research (STR).

Overall, the U.S. hotel industry’s occupancy rose 4.4% to 60.1%, its ADR was up 3.7% to $101.64 and RevPAR increased 8.2% to $61.06.
2011 was the first time since 2008 that the industry ended the year with occupancy of more than 60% and an ADR of more than $100. U.S. hotels reported a 0.6% increase in supply in 2011 and a 5% demand increase for the year. Demand has increased 5% or more only three times since 1987.
“2011 was a strong year for the U.S. hotel industry,” said Randy Smith, co-founder and chairman at STR. “Room-supply growth continued to drift downward as room demand reached record levels during the year. Though occupancy and ADR were still below 2007 and 2008 levels, it was still encouraging to see the industry experience a solid rebound during a period of considerable economic difficulties.”
The U.S. hotel industry is expected to report steady RevPAR increases in both 2012 and 2013, according to the most recent forecast from STR in partnership with Tourism Economics.
Overall in 2012, the U.S. hotel industry’s occupancy is expected to rise 0.5% to 60.4%, its average daily rate is projected to be up 3.8% to $105.45 and its revenue per available room is planned to increase 4.3% to $63.68.
“2012 may prove to be challenging for the U.S. hotel industry,” said Randy Smith, co-founder and chairman at STR. “There are a number of issues that will confront the industry and overall economy this year. We believe that given how well the hotel industry did during 2011, it will be difficult in 2012 to show significant growth. However, we remain optimistic the industry will continue to report modest increases in 2012.”

So, how did your business fare in comparison? As you know, each region and individual hotel can vary greatly from these national statistics. Many of the hotels that I work with were performing well ahead of 2010 until December. The lack of snow hurt the December 2011 performance and continues to reduce room demand in 2012.
Thinking of Selling?
At CenterPoint, we have seen a significant increase in buyer activity. Inquiries on all types of businesses are at a higher level than we have seen in years. Other business brokers are experiencing the same increase. This is a great sign for any hospitality owner thinking about exit options.
If you think it may be time for you to retire, or move on to other ventures, I encourage you to call or email me to talk further about an exit from your business.

O.J. Robinson of CenterPoint has many years in the hospitality industry in New Hampshire. He is the former owner of Parker’s Motel in Lincoln and is one of the owners of the Whale’s Tale Waterpark in Lincoln. He has provided consulting, exit planning, and brokered the sale of numerous lodging properties of various sizes. oj@cpointadvisors.com