Smith Travel Forecasts Hotel Rates To Keep Falling Through 2010

Incentive: Merchandise

Smith Travel Forecasts Hotel Rates To Keep Falling Through 2010
September 10, 2009

By Michael Baker

Smith Travel Research is holding firm to its forecast of continued hotel occupancy, revenue and rate declines through 2010, despite seemingly sunnier results posted by the U.S. lodging industry in July.

The research firm has projected a full-year average daily rate drop of 9.7 percent this year, as well as a 17.1 percent drop in revenue per available room and an 8.4 percent drop in occupancy (BTNonline, July 8). The firm expects those drops to continue, albeit more modestly, in 2010. Even though July showed signs of recovery, with gains in weekend leisure demand, Smith Travel Research industry research manager Chad Church said there was no reason to alter those expectations.

"July is only one month, and a single month isn't a trend," Church said in a forecast note posted this week on the firm's HotelNewsNow Web site. "Daily data from August has been less than stellar, and with the Labor Day comparison to 2008, it may prove to be an especially difficult month. It seems that November 2009 would be our best opportunity to see demand move into flat or positive territory, but that's more a function of the comparison to large demand losses in 2008 rather than true demand growth."

Demand might take a further hit if unemployment numbers do not improve or if the swine flu virus has a significant impact on travel, according to Church.

Nielsen Business Media

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