The hotel industry will finish the year better than anticipated and is positioned for continued growth—and higher rates—in 2011, according to projections from Smith Travel Research.

Two of the three major metrics used to determine industry performance will end the year on a positive note. Occupancy will be up 5.3 percent to 57 percent, while revenue per available room is expected to be up 5.2 percent to $56.23. Average daily rate will end the year virtually flat at $97.92. Further, supply will have increased about 2 percent for 2010, while demand is projected to finish the year up 7.4 percent.

“Demand has been a pleasant surprise, and it really is the driver behind the kind of year we’ve experienced,” said Mark Lomanno, president of STR, Hendersonville, Tenn., in a press release. “With that said, hoteliers need to take advantage of the pricing power they’ve been given because of the increased demand. Our forecast reflects that there will be a movement toward increased rates in 2011.”

STR projects year-over-year increases in all three metrics in 2011. Occupancy will rise 1.6 percent to 58.3 percent, ADR will increase 3.9 percent to $101.73, and RevPAR will climb 5.5 percent to $59.35 at the end of 2011. Supply will increase 1 percent, while demand will jump 2.5 percent.