South Florida hotels received their 2011 report card Thursday, and the grades look solid. Smith Travel Research released its December survey of room rates and occupancy levels, and both measures showed strong gains for Broward and Miami-Dade. Rates are up 2 percent in Broward and 6 percent in Miami-Dade over 2010 results, and occupancy grew between 5 and 7 percent in both counties.
Orlando hotels filled about eight of every 10 rooms in March, a rare feat that hasn't happened in three years. Properties in the Orlando area logged an average occupancy rate of 80.6 percent — the first time the local market has topped 80 percent since March 2008. And last month's occupancy was up 9.9 percent compared with the same month a year ago, according to data released Wednesday by Smith Travel Research.
Consumers contemplating a getaway may want to book a hotel room sooner rather than later, as room rates are set to rise this year. Substantial increases of $10 or more are at least another year or two away, but the lodging industry plans to take advantage of improving market conditions.
Several leading hotel operators including Marriott International, Hilton Worldwide and Starwood Hotels and Resorts are incrementally upping average daily rates in light of the return of leisure and business travel, and the relatively fixed supply of rooms given the lack of new construction.
-“There seems to be a very broad economic recovery underway,” stated Arne Sorenson, president & COO of Marriot International, during a big brands panel discussion. “Yes, there are structural issues.” These could become obstacles to recovery if they arise, he noted, but he is optimistic about lodging’s next few years. The panel, labeled “Hotel Leaders Outlook – The Big Brands’ Perspective” was moderated by Scott Berman, principal, Pricewaterhouse Coopers and joining Sorenson on the panel were: David Kong, president & CEO, Best Western International; Raymond Bickman, Taj Hotels; and Frits van Paasschen, president & CEO, Starwood Hotels & Resorts.
Mark Lomanno, president of STR, looks back at the year that was for the U.S. hotel industry and then provides an outlook for future performance.
Demand is coming back. So is revenue per available room. But average daily rate? Well, that’s another story.
ADR has been suppressed during the ongoing hotel sector recovery. For the week ending 4 December, for example, STR reports the metric increased by just 0.5% to US$96.87. By comparison, occupancy for the week ended up 4.7% to 49.9% while RevPAR increased 5.3% to US$48.31.
A familiar refrain echoed inside a classroom at Cornell University’s School of Hotel Administration last week. “Deep discounting doesn’t do much.” In other words, maintain your rate. That message was delivered by Cornell professor Cathy Enz during the Cornell Hospitality Research Summit. In her seven-year study of the United States’ hotel sector’s downturn, using STR and STR Global data, she found those hotels that priced above their competition saw lower occupancy, but that drop-off was more than made up by bigger revenue per available room gains. “The best way to maintain higher revenue per available room is to maintain higher rates,” she said. Easier said than done, apparently.
Mark Woodworth, President of PKF Hospitality Research, recently presented at the Cornell University School of Hotel Administration Dean's Distinguished Lecture Series. Before his presentation, Mark sat down with Jon Denison, Associate Dean for External Affairs for a brief conversation regarding the state of the U.S. lodging industry, as well as Mark's time as a student on campus.
Sluggish hotel demand outside the largest U.S. cities is slowing an industrywide rebound even as an influx of leisure, business and international travelers spurs growth in metropolitan areas such as New York. Occupancies at hotels in small towns and near highways were little changed at 49 percent in the first six months of 2010, according to Smith Travel Research Inc. They climbed to 65 percent from 61 percent from a year earlier in large cities including New York, Chicago and Washington.
The hotel industry in the United States appears to be rebounding this summer, mainly because of strengthening business travel. So far the biggest beneficiary is New York, though other cities on the East Coast are starting to report gains as well. And the upscale, full-service hotels that have long been favored by business travelers have benefited more from the upturn in demand than the midlevel brands, industry analysts say.
Instead of generous “stay two nights, get one night free” offers, hotels are offering more modest, targeted promotions, often with lots of fine print attached. But the good news is that hotel rates haven’t really risen from last year’s lows — at least not yet.
Arizona hoteliers are feeling the backlash of the recently-passed immigration law as groups cancel their meetings in the state. STR data shows Arizona hotels began losing business soon after the law was signed on 23 April. While occupancy rose 2.4 percent for Arizona hotels the week of 25 April through 1 May 2010 compared to the same week last year, revenue per available room dropped 2.6 percent and average daily rate decreased by 4.8 percent to US$97.86. Occupancy was at 56.2 percent for the week, compared to 54.9 percent last year, and ADR fell from US$102.79 last year to US$97.86 for the same week in 2010.
It might be time for South Florida hotels to put hurricanes back atop their worry list. The economy's pounding of the tourism industry seems to have eased considerably, with new numbers suggesting a healthy rebound under way at hotels. With the peak of the winter tourism season finishing strong, that would leave the summer (and the storms it often brings) as the big hurdle to a lasting recovery.
As of February 2010, the U.S. has been in a 26-month-long recession. The lodging hospitality industry has experienced record RevPAR decline and the lowest hotel occupancy rate in 38 years. This new 30-minute audio briefing by the faculty of the NYU Tisch Center is the most comprehensive presentation to date on the impact of the recession on the U.S. lodging industry. It includes timely data about historical patterns of recovery from past U.S. recessions, the current outlook for recovery in specific chain scale and demand segments, and forecasts about revenues and profits. As well, the briefing summarizes long-term effects and implications for the hospitality industry. This is the fourth in a series of audio briefings by the NYU Tisch Center faculty about the recession since fall 2008. These have become highly anticipated, “must listen to” presentations—the two prior briefings were downloaded by more than 2,500 lodging industry executives.
Economic research firm e-forecasting.com, in conjunction with Smith Travel Research, announced the U.S. Hotel Industry Leading Indicator—HIL—edged down 0.2 percent in January, the first monthly decrease after nine consecutive months of increases for the indicator. HIL went up 1.4 percent in December.
Expedia Inc., the biggest Internet travel agency, said declines of hotel room rates started to slow in the fourth quarter as cheaper currencies attracted more travelers in some regions.
It is a buyer's market for hotel rooms in the United States, and the situation is not likely to change soon. Hotel occupancy rates have stabilized, but discounting of room prices remains rampant in many markets, indicating a slow recovery for the industry. While most participants at a hotel business conference in San Diego this week said the bottom of cycle was near, they also saw no upturn before 2011.
Revenue per available room fell 16.7 percent to US$53.71 during 2009, according to year-end reports from Smith Travel Research. The industry’s occupancy fell 8.7 percent to 55.1 percent for the year and average daily rate dropped 8.8 percent to US$97.51. “Good riddance to 2009, a year which we believe will go down as the worst in the modern hotel industry,” said Mark Lomanno, president at STR. “The combination of a distressed economy in conjunction with panic pricing drove RevPARs down to levels that were virtually incomprehensible just a year and a half ago. I look for a significant improvement in the key hotel performance indicators in 2010.”
Orlando's hotel industry ended 2009 with another bad month in a string of bad months — and, by many measures, its worst year on record. Hotels in the Orlando area were little more than 60 percent full on average in December. That was down just 2 percent from the same month a year ago, but hoteliers also continued slashing prices, cutting the average daily room rate 10.9 percent to $86.69, according to data released Thursday by Smith Travel Research
There is some positive news coming out of the last week of 2009—finally! Today Smith Travel Research released data indicating positive year-over-year growth in two of the three major metrics for the U.S. hotel industry for the week ending 2 January 2010. Annual New Year’s Eve festivities helped immensely, and the calendar worked in favor of increased occupancy and extended trips compared to last year, according to Chad Church, manager of industry research for STR.