The average U.S. hotel suffered a 19.4 percent decline in profits in 2001, according to the 2002 edition of Trends in the Hotel Industry-USA, published by PKF Consulting and the Hospitality Research Group (HRG). The downturn represents the first decline in hotel profitability since 1991, and the largest single-year drop recorded since 1938. Given the firm's projections for a continued decline in hotel revenues in 2002, the average U.S. hotel will be less profitable this year, as well.

The news is worse for the meetings and conventions industry. Of all the different hotel categories, convention hotels endured the greatest fall-off in revenues (12.9 percent) and profits (24.3 percent). Full-service hotels and resorts were also hit hard, while limited-service properties fared the best.

"Going into 2001, we were projecting a modest 5.6 percent decline in hotel profits. Clearly, the events of September 11 exaggerated the drop and contributed to the worst single year deterioration in hotel performance ever," says R. Mark Woodworth, executive managing director of Atlanta-based HRG. "In 2002, we continue to see hotels struggle to maintain their top line revenues, which will ultimately result in yet another year of falling profits." Based on an estimate of flat occupancy, together with a 4.6 percent drop in average daily rates in 2002, HRG is projecting that the average U.S. hotel will show an 11 percent decline in operating profits for the year. "While market conditions are expected to improve somewhat during the third and fourth quarters, the lodging industry has started out the year in a pretty deep hole," says Woodworth.

To order a copy of the 2002 edition of Trends in the Hotel Industry, call (404) 842-1150, ext 223.