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Hotel Industry Flying High

NEW YORK CITY-RevPar figures have climbed out of the hole they were in earlier this decade following the Sept. 11 attacks and the conflict in Iraq to reach record numbers, according to Torto Wheaton.

By Melissa Kress | Updated on December 07, 2005

NEW YORK CITY-As the economy continues to recover, all signs point to a continuing uptick in the hotel industry, according to the 2006 Hotel Outlook by Torto Wheaton. “Hotels are doing quite well as an industry and it will continue,” said Ray Torto, chief strategist and co-founder of Torto Wheaton. “We see no pause as a business and investment vehicle.”

One sign is the new peak RevPar reached in 2005. “This is one indication of the strength of this marketplace,” he added in a morning conference call with CB Richard Ellis. RevPar, which Torto explained has a strong correlation with the state of the economy, was in a significant hole in the early part of the decade because of Sept. 11 and the conflict with Iraq. However, it has now “come out of this hole to new record numbers.”

Another sign that the industry is going strong is that demand exceeded new supply this year, and the trend will continue next year. According to Torto Wheaton, approximately 35,000 new rooms will come into the marketplace in 2005 and approximately 55,000 new rooms are forecast to come into the marketplace in 2006. With the number of existing hotel rooms at approximately 4.25 million, the total number of rooms to be delivered this year equals less than 1%, added Kevin Mallory, senior managing director and US practice leader for CBRE Hotels. That figure reaches above 1% in 2006 but does not surpass 2%, he added. These numbers contrast with the demand for approximately 85,000 rooms this year and 90,000 rooms next year. “We have a situation where new supply coming into the marketplace is under control,” Torto explained.

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