Summer 2006: Hotels Profit, Guests Pay | PKF Reports
ATLANTA, Two conclusions from a recent report issued by PKF Hospitality Research are likely to have an impact on travelers staying at hotels this summer. First, hotel rooms will be harder to find, compared to last year, and, second, travelers will pay more for these rooms. In fact, summer travelers are forecast to spend an average of 6.0 percent more to rent a hotel room this summer compared to the summer of 2005.
ATLANTA, Two conclusions from a recent report issued by PKF Hospitality Research are likely to have an impact on travelers staying at hotels this summer. First, hotel rooms will be harder to find, compared to last year, and, second, travelers will pay more for these rooms. In fact, summer travelers are forecast to spend an average of 6.0 percent more to rent a hotel room this summer compared to the summer of 2005. Hotel occupancy rates are forecast to average 74.1 percent, the highest level since 1997. This analysis is based on the summer 2006 edition of Hotel Outlook, an econometric forecasting model developed by PKF Hospitality Research (PKF-HR) and Torto Wheaton Research.
"It will be tough to find a hotel room during the summer of 2006 without booking in advance," said R. Mark Woodworth, president of Atlanta-based PKF- HR. "Given the increasingly sophisticated yield management practices within the hotel industry, the high occupancy rates are enabling managers to more aggressively quote the highest room rates. This is good news for hotel owners, but not for consumers."
News of high gas prices created speculation that people would curtail their summer travel plans. However, historical analyses have shown that the nation's population will continue to take their summer vacations even during tough economic times. "Regardless of recessions or energy crises, we have observed that the public continues to travel, but they will alter their traditional plans," Woodworth said. "This summer, in order to compensate for higher gas prices and airfares, we are seeing a migration toward more economical accommodations. The gain in limited-service revenue per available room, or RevPAR, of 13.7 percent is far greater than the 7.2 percent increase forecast for full-service properties."
During the summer of 2006, limited-service occupancy levels are projected to increase 6.2 percent to a level of 74.8 percent. Full-service hotels are forecast to achieve an average occupancy of 73.8 percent, an increase of just 0.5 percent from the summer of 2005.
Hotel Outlook is an econometric forecasting model developed jointly by PKF-HR and Torto Wheaton Research. The model is based on historical data from Smith Travel Research and economic inputs from economy.com. Hotel Outlook forecasts provide six-years of supply, demand, occupancy, average daily rate (ADR), and RevPAR information for 52 major markets across the United States. The forecasts are updated each quarter.
For Bargains, Head South
The summer season is very important for 41 of the 52 markets covered by Hotel Outlook. However, for the remaining 11 markets, occupancy and ADR levels in the summer are less than the annual average. These are the markets where potential discounts may be found.
Some of the lowest room rates can be found in the places like the Buckeye state, where air temperatures are more moderate. "To truly enjoy a bargain vacation, people may want to visit the Air Force Museum in Dayton or window shop in and around Easton Town Center in Columbus," Woodworth advised.
The lowest average room rate this summer is likely to be found in Albuquerque. "This will make the cost of gasoline driving along the Turquoise Trail a little easier to absorb," Woodworth said.
Crowded On the Coasts
Since 2001, some of the greatest swings in lodging performance have occurred in the major coastal cities of the U.S. Hotels in these markets have seen their revenues cut in half during the recession, only to approach all time high occupancy levels in 2005. Part of this extraordinary recovery can be attributed to the return of tourists during the summer season.
"New York, Honolulu, and San Francisco hotels are all forecast to achieve occupancy rates in excess of 80 percent during June, July, and August, as well as charge the highest room rates during these months," Woodworth said. "What is interesting to note is that summertime is a relative bargain in these cities. The average summer room rates in New York, Honolulu, and San Francisco are less than their annual average ADRs."
To order a Hotel Outlook forecast for your market, please visit the firm's online store at
U.S. HOTELS - SUMMER 2006
Change In Performance From Summer 2005
Type Of Hotel Occupancy ADR RevPAR
All Hotels 2.6% 6.0% 8.6%
Limited-Service 6.2% 7.5% 13.7%
Full-Service 0.5% 6.7% 7.2%
Source: PKF Hospitality Research
HOTEL ROOM RATES
Summer 2006 Forecast
Market Summer 2006 ADR
New York $200.28
Honolulu $159.56
San Francisco $139.43
Long Island $139.34
Boston $137.43
National Average $108.44
Charlotte $73.56
Tucson $70.22
Columbus $69.42
Dayton $68.91
Albuquerque $67.95
Source: PKF Hospitality Research
HOTEL OCCUPANCY RATES
Summer 2006 Forecast
Market Summer 2006 Occupancy
San Diego 86.6%
New York 84.7%
Anaheim 84.5%
Long Island 83.7%
Seattle 83.7%
National Average 74.1%
Fort Lauderdale 64.0%
Miami 63.9%
Tampa 62.8%
Phoenix 57.9%
Tucson 56.9%
Source: PKF Hospitality Research
IMPORTANCE OF SUMMER SEASON
U.S. City Summer Performance As A
Percent Of Annual Performance
1988 to 2005 Average
Ratio
Summer Performance To Annual
Performance
Type Of Hotel Occupancy ADR RevPAR
All Hotels 108.3% 96.5% 106.1%
Limited-Service 111.9% 102.5% 120.2%
Full-Service 106.3% 95.6% 102.0%
Sources: Smith Travel Research, Torto Wheaton Research, PKF Hospitality
Research
IMPORTANCE OF SUMMER SEASON
Summer RevPAR
As A Percent Of Annual RevPAR
1988 to 2005 Average
Ratio
Market Summer RevPAR to Annual RevPAR
Long Island 155.1%
Cincinnati 154.5%
Boston 152.7%
Seattle 151.4%
St. Louis 150.2%
National Average 106.1%
Miami 56.9%
Fort Lauderdale 47.8%
West Palm Beach 44.6%
Tucson 43.6%
Phoenix 40.6%
Sources: Smith Travel Research, Torto Wheaton Research, PKF Hospitality
Research
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