Hotel Occupancy, Rates, Profitability Improved in 2011; Show Managers Now Dealing with Seller’s Market

SANDI CAIN, NEWS EDITOR
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Hendersonville, TN – The U.S. hotel industry in 2011 gained strength in its three key metrics: occupancy, rates and profitability, and is poised for additional growth in 2012. That’s according to the most recent industry forecast from Smith Travel Research (STR) of Hendersonville, TN. Smith Travel projects more of the same for 2012, though gains are expected to be smaller than last year.

Overall, occupancy rose 4.4% to 60.1% in 2011; the average daily rate increased 3.7% to $101.64; and revenue per available room (revPAR) was up 8.2% to $61.06. Demand for hotel rooms also increased by 5%, while supply rose a scant 0.6%. Amanda Hite, president of Smith Travel, said in a release that the forecast for modest growth reflected record levels of demand for hotels in an overall economic environment that remains somewhat stagnant.

Among the top 25 markets tracked by Smith Travel Research, Detroit posted a 10.2% increase in occupancy, the biggest increase in top-tier markets. That placed the city at 59.8% occupancy, just a hair under the national occupancy rate for the year. Tampa-St. Petersburg ranked second in occupancy growth, up 9.7% to an overall 60.5% occupancy rate.

The San Francisco-San Mateo market posted the biggest gain in average daily rate, climbing 13.9% to $155.14. Oahu’s rates rose 10% to $165.05.

Atlanta-based PKF Consulting USA was more optimistic in its forecast, projecting 60.5% occupancy growth accompanied by 4.7% growth in room rates and profitability growth of 5.4% in the hotel sector this year.

Mark Woodworth, president of PKF Consulting in Atlanta, which tracks 50 markets, said in a release that 41 of those top markets had demand for rooms at or above their previous peak as of last September 30. A total of 49 upper-priced hotel chains reached previous demand peaks while only 16 lower-priced chains achieved that target, according to PKF research.

It’s a Seller’s Market
While forecasters cautiously projected continued improvement for 2012, show organizers who are booking hotel room blocks are finding economic conditions swinging back toward hoteliers in high-growth markets this year. High demand, coupled with low or no growth in room supply, are generally resulting in higher room rates for groups.

Reach Amanda Hite at (615) 824-8664 ext. 3348 or ahite@str.com; Mark Woodworth at (404) 842-1150 ext. 222 or mark.woodworth@pkfc.com