STR: Hotel Demand Rushes Back, But Meetings Will Decide if Recovery Holds

Highlights
Biggest quarterly demand increase in 23 years

STR reports that second-quarter room demand at U.S. hotels rose 8.7 percent, the largest quarterly demand increase since the Henderson, Tenn.–based research company began tracking performance in 1987.

Of course, as Jan Fiertag, vice president, business development, at STR, pointed out in a recent column at hotelnewsnow.com, considering the terrible 2009 numbers, “the comparables are ridiculously easy. Room demand declined 8.4 percent in the first six months of 2009. ADR was down 8.6 percent. Anyone who expected less than stellar growth rates in 2010 did not understand the meaning of the word ‘rebound.’ The true test will come in the fall of 2010, when the traditional meeting season is in full swing. Those results will give an indication of the sustainability of this recovery rally.”

For the first half of 2010, the U.S. hotel industry saw increases in two of the three key performance metrics compared to last year: Occupancy was up 4.4 percent and revenue per available room increased 2.3 percent. Average daily rate fell 2 percent to $97.18 in the first half of 2010; however, in the second quarter, ADR was flat, suggesting gradual strengthening of rates. And in the luxury sector, rate strength already has returned, with ADR increases marked in both May and June.

“First-half and second-quarter U.S. hotel industry performance demonstrated marked improvement from 2009—particularly on the demand front,” said Bobby Bowers, senior vice president at STR, in a press release. “ADR growth is slowly improving, and we expect continued gradual improvement through the second half of the year. We’re forecasting full-year 2010 RevPAR growth of just over 5 percent, driven almost exclusively by occupancy gains.”

Two of the top 25 markets did report an ADR increase through the first half of 2010 compared to the same period last year: New York City, up 5.4 percent to $209.42; and Miami/Hialeah, Fla., up 2.8 percent to $160.72.

The five cities within the top 25 markets that reported the greatest ADR decrease:
1. Tampa/St. Petersburg, Fla.—down 10.7 percent to $97.98
2.Detroit—down 8.5 percent to $75.29
3.Phoenix—down 7.7 percent to $111.11
4.Seattle—down 7.0 percent to $106.80
5.San Diego—down 6.1 percent to $117.96

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© 2012 Penton Media Inc.


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