Hotel Industry Outlook Won't Improve Until Group Business Is Back

Some meeting planners might be getting back to business for 2010, but the outlook for hotel occupancy remains low. Though the forecast for the hotel industry next year looks slightly better, Smith Travel Research predicts decreases in all three of its key metrics—hotel occupancy, ADR and RevPAR—at the end of 2010. Occupancy is projected to end 2010 with a 0.3 percent decrease, ADR with a 3.4 percent decrease, and RevPAR with a 3.7 percent decrease.

"The reality is it's going to take that group business to get back for the industry's fundamentals to start improving," STR President Mark Lomanno said in a statement. "I don't know how long it will take to get it back to the levels it was in 2006, 2007 and maybe the beginning of 2008. That's going to need to get into a range that's 90 percent to 95 percent of where it was before, which will generate transient demand, and then there will be some pricing power. On an inflation-adjusted basis, it's probably going to be longer than six years before the rates get back to 2007 levels."

In the meantime, STR also predicts 2009 occupancy to be down 8.4 percent and ADR to be down 9.7 percent. The equates to 55.4 percent occupancy and an ADR of $96.37.
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