Random Hotel Exterior

STR forecast somewhat encouraging

September 1, 2009 7:35 am

Smith Travel Research, through its on-line daily e-news publication Hotel News Now, released its projections for year end 2010, with two of the three major indicators predicted to increase.  Year over year occupancy and RevPar are both expected to increase by approximately 4.3%, while ADR is projected to remain flat.  In our brokerage practice, I would concur with the STR projections, as our group is seeing increases in occupancy and RevPar.  Increase in ADR has been more resistant, though.  One possible reason is that owners have made an effort to resist lowering their rates during the recession and therefore, the rebound in rates will be somewhat less dramatic.  Also, the owners have been more interested in building occupancy and, therefore, rate management will depend on their ability to build occupancy.   Not many owners want push rates until the recovery is more consistent. 

Although the STR predictions are good news, they are just predictions.  The recovery holds the key to the fundamentals of the hotel business and time will tell.  I am hopeful that they are right and we actually surpass their projections.  With that said, I hope everyone has a great Labor Day weekend.