According to an October 5 report from Reuters published in the Chicago Tribune, U.S. hotel room revenues are already beginning to approach pre-September levels by the end of the third week following the attacks. While Smith Travel Research reported that revenues per available room decreased on average 16.5 percent last week, but the day-to-day revenues showed a different story, according to the report. The 24.7 percent drop U.S. hotels reported on September 23 had declined to 6.5 percent by September 29. U.S. hotel room revenues were down 4.6 percent in August. Still, the article says, "Many have warned that third- and fourth-quarter earnings will miss forecasts."
Meanwhile, the Hospitality Services Group of Ernst & Young has revised its growth and profitability forecasts for the U.S lodging industry in 2001 due repercussions from the September 11 attacks.
The firm’s original 2001 forecast (released in January 2001) included a projected growth in the national revenue per available room of 3.7 percent or $56.33. Due to continuing reductions in business and leisure travel, the firm now projects adecline of 5.2 percent for 2001, for an overall 2001 revPAR of $51.
The projected 2001 occupancy rate of 63.7 percent was already lower than 2000 due to reductions in business travel. Now Ernst & Young forecasts that the national average occupancy will fall an additional 3.2 percent to 60.5 percent for the year. This occupancy figure is the lowest in ten years, when during the Gulf War occupancy dropped to 61.8 percent.
"The combination of the economic slowdown and tragic events of September 11 have led to the worst occupancy rates we've seen in ten years," says Chase Burritt, national director of Ernst & Young's Hospitality Services Group.
Burritt expects business travel to be the first area to recover. One of the bigger losses during the month of September was the loss of conventions that canceled and did not reschedule. Conventions should be going ahead on schedule for the rest of the year and with and business travel should slowly resume. Burritt also says that many hotel operators may have to offer lower room rates and the average daily rate (ADR) across the country will likely fall to $85 by the end of the year. (ADR for 2001 was originally forecasted at $88.)