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Hotel Sector's Recovery Could Be Delayed

ATLANTA-PKF Hospitality says the US lodging decline will take until 2011 to rebound.

By Carl Cronan | Updated on March 18, 2009

ATLANTA-Locally based PKF Hospitality Research says the current decline in the US lodging industry will be deeper and longer than previously predicted, based on worsening economic projections. Revenue per available room (RevPAR) is expected to decline nearly 14% this year, with quarterly sales gains not anticipated until early 2011.

In analyzing 50 major hotel markets nationwide, the firm has determined that even though each of those markets varies based on local characteristics, the aggregate performance of thousands of hotels appears grim. PKF’s revised 2009 forecast, which earlier this year predicted a 10% RevPAR decline, is based on a 7.8% falloff in occupancy this year, as well as a decrease in average daily rate of 6.4%–the lowest since the early 1930s.

“When revenue contraction is heavily influenced by declines in ADR, the downward impact on profit is amplified,” says Mark Woodworth, president of PKF Hospitality Research. PKF also forecasts that the average US hotel profits will fall by 30% this year, another level of deterioration not seen since the Great Depression.

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