PKF-HR Updates Forecast to Show RevPAR Growth in 2010 While Profits Lag

ATLANTA, GA., May 25, 2010 – PKF Hospitality Research (PKF-HR) today announced that, according to the May 2010 edition of Hotel Horizons®, U.S. hotels should enjoy a 1.7 percent growth in RevPAR in 2010, but bottom-line profits (NOI) will contract another 1.4 percent.

The projection of growth in RevPAR for 2010 marks a very positive change in the outlook for the U.S. lodging industry since PKF-HR’s last forecast published in March of 2010.

“We believe the first quarter surge in occupied rooms foretells the start of a strong comeback in the demand for lodging accommodations,” said R. Mark Woodworth (top right photo) president of PKF-HR.

“As early as September of 2008, we anticipated the inflection point for hotel demand to occur in the first quarter of 2010, but quite frankly, the magnitude of the turnaround was a very pleasant surprise.

" Such a large increase in lodging demand suggests a return of pent up travel that did not occur in 2009 because of budget constraints, plus the real hotel demand growth attributable to improvements in the long-term economic outlook.”

 According to Smith Travel Research (STR), lodging demand in the first quarter of 2010 increased 5.3 percent over the first quarter of 2009. This is the largest quarterly increase in hotel demand since the second quarter of 1989, and surpassed PKF-HR’s forecast of a 2.6 percent gain.

“Forecasting turning points in hotel market performance is a tricky proposition, largely because of the complications on the supply side of the hotel market,” said John B. Corgel Ph.D. (lower left photo), the Robert C. Baker professor of real estate at the Cornell University School of Hotel Administration and senior advisor to PKF-HR.

 “The hotel cycle is a hybrid of the business cycle on the demand side and an endemic cyclical pattern of the real estate market on the supply side.

"The shape of hotel market movements over time begins with the connection to the business cycle, but then takes its final form as the result of the considerable time required to construct new hotels to be built in response to increases in hospitality demand.

"Therefore, the market tends to ‘hang’ for a lengthy period at the peak until construction accelerates. Conversely, the market ‘hangs’ in the trough because hotels are not demolished simply because demand is weak.”

To purchase Hotel Horizons® forecast reports for the United States, or one of 50 individual markets, please visit the firm’s online store at http://www.hotelhorizons.com/, or call (866) 842-8754.

For a complete compy of PKF's news release, pleasse contact:

Mark Woodworth, President, PKF Hospitality Research, (404) 842-1150, ext 222  or 

Chris Daly or Jerry Daly (media), Daly Gray Public Relations, ( (703) 435-6293