STR Downgrades Hotel Industry Forecast

The usually optimistic number-crunchers from Smith Travel Research aren’t so sunny anymore. The Nashville-based company yesterday released its updated 2009 and 2010 forecasts for the U.S. hotel industry, and the news isn’t good:

• This year, STR forecasts occupancy to be down 8.4 percent to 55.4 percent, with ADR declining 9.7 percent and RevPAR plummeting by 17.1 percent.

• While 2010 will be better, STR expects continued declines in all three operating metrics. The forecast calls for drops in occupancy (down 0.3 percent), rate (down 3.4 percent) and RevPAR (down 3.7 percent).

Calling the forecast “disappointing, surprising and a little sad,” STR President Mark Lomanno thought the industry would have been able to maintain its rates better than it has through the current downturn.

“A lot of the commentary we heard from the brands and their revenue managers is that they learned their lessons in 2001-2002, and they would be able to react better the next time around,” says Lomanno. “For whatever reason—maybe because this downturn is so severe and so dramatic and so different than they were expecting—what they learned they weren’t able to apply.”

As recently as last month, STR had forecast less severe declines this year and increases in rate and RevPAR next year, along with flat occupancy.

The firm also released its weekly performance data for June 28-July 4. During the period, occupancy fell 6.0 percent to 57.7 percent; rates dropped 7.4 percent; and RevPAR declined by 13.0 percent.


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