First Half of 2009: One of the Worst Ever for Hotels
The hotel industry may have hit bottom in the first half of 2009, as the three major metrics — occupancy, revenue per available room, and average daily rate — suffered steep declines for the first six months of the year.
“The first half of 2009 was, without question, one of the most challenging the U.S. lodging industry has experienced,” said Bobby Bowers, senior vice president of operations at Smith Travel Research, Hendersonville, Ky., in a news release. Compared to the first six months of 2008, RevPAR dropped 19 percent — the largest first-half decline ever recorded by STR. Also, occupancy fell 11 percent (to 55 percent), and ADR dropped 9 percent, to $98.66.
The second quarter was particularly rough, as RevPAR declined 19.5 percent, occupancy fell 11 percent, and ADR dropped 10 percent.
Not one of the top 25 markets reported increases in any of the three metrics compared to the same period in 2008. Rather, success was determined by how small the declines were. By that measure, Washington, D.C., performed the best among the major markets as RevPAR fell 6 percent, occupancy fell 4 percent, to 67 percent, and ADR decreased 2 percent, to $154.34. Only three other major markets reported ADR decreases of less than 5 percent: Houston (down 4 percent to $96.26); Nashville (down 4.8 percent to $91.72); and New Orleans ( down 4.8 percent to $120.58).
New York City suffered the steepest drop in rate, as ADR fell 24 percent in the first half to $198.55. Phoenix (down 15 percent to $119.80) and San Francisco/San Mateo, Calif. (down 15 percent to $130.94) were next.
Occupancy rates sank the furthest in Detroit (down 17 percent, to 47 percent) and Phoenix (down 15 percent, to 57 percent).
For RevPAR, 13 of the top 25 markets posted declines of more than 20 percent. New York (down 32.5 percent), Phoenix ( down 28 percent), and Chicago (down 27 percent) were hit the hardest.
“While there is some evidence that industry performance has bottomed out, hotel operators will continue to face harsh operating conditions — particularly from a pricing perspective — in the second half,” said Bowers in a statement. STR is forecasting a total industry RevPAR decline of approximately 17 percent for 2009.
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© 2012 Penton Media Inc.
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