Demand will increase slightly for hotels this year as supply sharply rises, according to the new PhoCusWright Financial Edition outlook on the hotel industry. Overall, consumer demand is down more than it was during the 1990-91 recession and post 9/11—5.5 to 6 percent in 2009. The research firm forecasts that demand will be up 1 to 1.5 percent in 2010, with growth in 2011 at 5 percent. From a supply standpoint, the number of new rooms coming online rivals historical peaks, with a 3 percent growth in 2009. However, between 2011 and 2013, supply growth will decelerate to less than 1 percent.
Occupancy dropped from 63 percent in 2006 to 55 percent in 2009. PhoCusWright projects that the key metric won’t return to 60 percent until 2012. Meanwhile, average daily rates (ADR) fell by nearly 9 percent last year and will continue to drop until 2011. The report also notes that it will take even longer for rates to catch up to previous peak levels. In 2009, RevPAR experienced a free fall of 17 percent and will continue to drop until next year. PhoCusWright estimates that 2012 RevPAR will only be 90 to 95 percent of the 2007 peak.
