According to the recently released June 2014 edition of PKF Hospitality Research, LLC’s (PKF-HR) Hotel Horizons forecast report, the U.S. lodging industry will achieve an occupancy level of 63.6 percent this year, topping the pre-recession peak of 63.1 percent reported by STR, Inc. (STR) in 2006. 

Given this favorable balance between supply and demand, R. Mark Woodworth, president of PKF-HR, predicts that hotel owners and operators will begin to see real recoveries in average daily rates (ADR) and net operating income (NOI).
“The domestic hotel industry is operating at peak performance. We can stop using the term ‘recovery,'” Woodworth says. “The U.S. lodging industry is at a place in the business cycle where a confluence of market and operational factors will lead to impressive performance on both the top- and bottom-line. In 2014 and 2015, our firm is forecasting several all-time highs for some of the most important metrics in the hotel business.”
By year-end 2015, PKF-HR projects that the U.S. lodging industry will have achieved a fourth year of accommodated demand in excess of the pre-recession peak of 11.3 million room nights, as well as six consecutive years of increasing occupancy, the longest such streak since 1988.
The lodging industry should also reach an occupancy level of 64.6 percent, the highest level of occupancy since 1995. The industry is also expected to have achieved by 2015 five consecutive years of real ADR growth, leading to a full recovery in real terms from pre-recession levels.
To assess how long the U.S. lodging industry will be able to maintain the current elevated levels of operating performance, PKF-HR examined the factors that derailed industry performance in the past.
“A review of past lodging cycles reveals that five events, either on their own or in some combination, have brought an end to the good times,” says John B. (Jack) Corgel, PhD., the Robert C. Baker professor of real estate at the Cornell University School of Hotel Administration and senior advisor to PKF-HR. “Fortunately, some of the factors that have historically triggered the turning point at which cyclical declines commence appear benign, while other factors are entirely unexpected.”
