Five major lodging markets—Phoenix, Arizona; New York; Detroit, Michigan; Atlanta, Georgia; and Miami, Florida—have seen sharp revenue per available room (RevPAR) declines, according to Smith Travel Research. Though most industry markets have experienced declines since the summer of 2008, these five areas have been notably affected.
Occupancy in Phoenix declined 16.8 percent and average rates here dropped 14.2 percent, according to STR's three-month numbers ending in February 2009. This caused a drop in RevPAR by almost 29 percent.
Decreased demand in Detroit led to a RevPAR drop of 23 percent. Low demand along with new-room growth contributed to New York's drop in RevPAR of almost 23 percent. In fact, in just the past three months, demand for New York hotel rooms dropped 8.5 percent.
Meanwhile demand in Atlanta dropped 13 percent in the last three months, the largest drop out of all five markets. Demand declined by just 2.9 percent in Miami, but new-room supply growth led to a decline in RevPAR of about 20 percent.
STR predicts that supply growth will be a big concern for four of the five markets in the future, particularly in Phoenix, where eight percent of existing supply is under construction. Despite New York's under-construction total, the conversion of hotel rooms into condos will make it easier for the hotels in the metro area to absorb the effect.