According to the 2004 P&L Forecast recently published by the Hospitality Research Group of PKF Consulting, hotels in the United States will see profitability increase an average of 5.6 percent this year after three years of decline.

The projected 2.4 percent rise in average daily room rate (ADR), along with a predicted 1.9 percent occupancy growth, will drive most of the profit increases, according to a press release. The main beneficiaries of this turnaround will be full-service hotels, which are forecast to have 8.2 percent increases in profits, compared to 4.9 percent for limited-service hotels. This is because hotels profit more when revenue per available room is driven by average daily room rate: Full-service hotels' revPAR is forecast to grow 5 percent, with a 2 percent ADR increase; limited-service revPAR is predicted to increase 4.6 percent, but ADR is forecast to grow only 0.8 percent.

“The turnaround in demand began in the third quarter of 2003,” says Mark Woodworth, executive managing director of the Hospitality Research Group. “Most encouraging is that this demand growth continues to come back strong.”