US Hotel Demand Powers Ahead; Room Rates Continue To Lag

ATLANTA, GA, July 6, 2011 – The recovery of the U.S. lodging industry continues in a pattern established in the first quarter of 2010, with occupancy gains still outpacing gains in room rate.

  According to the June 2011 edition of Hotel Horizons®, PKF Hospitality Research (PKF-HR) forecasts that the demand for U.S. hotel rooms in 2011 will increase a solid 4.9 percent, while the average daily room rate (ADR) paid by guests will rise a modest 2.4 percent.

 “We continue to be impressed by the pace at which travelers have returned to the road after the depths of the Great Recession,” said R. Mark Woodworth (top right photo), president of PKF-HR.

 “Given the headwinds created by stagnant employment and continued weakness in the housing sector of the economy, it is somewhat surprising that hotel demand continues to bounce back as quickly as it has.”

 The 4.9 percent rise in occupied rooms forecast for 2011 compares to the 7.6 percent increase in lodging demand for 2010 reported by Smith Travel Research (STR).  Both growth rates are well above the STR long-term average annual demand growth rate of 1.5 percent.

 “Offsetting the surge in demand, however, has been relatively sluggish increases in room rates.  And, as hotel owners and operators know, it is ADR growth that powers profits,” Woodworth noted.

 “Given the sustained robust increases in demand, combined with limited new competition, one would expect that hoteliers should be able to start raising room rates more aggressively.

“ However, market conditions are still very competitive and, with few exceptions, scarcity has yet to be a concern for most lodging consumers.

“ We are forecasting that only 12 of the largest lodging markets in the U.S. will achieve an occupancy in 2011 that is greater than their long-run average.  It won’t be until 2013 that we see the majority of the 50 markets in our Hotel Horizons® universe exceed their long-run occupancy rate.” 

Accordingly, PKF-HR is forecasting that U.S. room rates beyond 2011 will grow at a greater pace: 5.5 percent in 2012 and another 5.8 percent in 2013.

For a complete copy of the company’s news release, please contact:

 Robert Mandelbaum                                               Chris Daly

PKF Hospitality Research                                      Daly Gray Public Relations

Tel: 404 842 1150, ext 223                                     Tel: 703 435 6293

Email: robert.mandelbaum@pkfc.com                 Email: chris@dalygray.com

www.pkfc.com                                                        www.dalygray.com