ATLANTA-Location, location, location. According to PKF Hospitality Research’s December 2011 edition of Hotel Horizons, in 2012, hotel addresses will, in part, determine success over the coming year. What will also impact performance? Pricing. In 49 of the 50 markets considered in the report, upper-tier hotels in 2011 outdistanced previous highs in accommodating demand. Lower-tier hotels have achieved this in only 16 cities.
Overall, the Hotel Horizons report presented an optimistic view for the segment into 2012, prompted in large part by the report’s excellent revPAR predictions. PKF’s research forecasts that revPAR will increase another 6.1% in 2012. That’s in addition to an 8.1% revPAR increase in 2011.
Furthermore, luxury, upper-upscale and upscale hotel properties are expected to experience occupancy levels over 70% through 2013; at least that’s what R. Mark Woodworth, president of PKF-HR, projects. “We’re seeing familiar signs along the road to recovery,” he commented. “Owners and operators are now focused on more aggressive pricing policies, which in turn will translate into strong growth in hotel profits.”
And these profits should come as a result of more bodies in rooms: PKF anticipates ADR will increase by 4.7% in 2012 and a further 5.3% in 2013. Woodworth explained that the ADR uptick is the result of hotel occupancy levels approaching their long-term average, plus a lack of “meaningful” supply additions. “It’s not a surprise that the pace of ADR growth is forecast to accelerate,” he noted.
But Woodworth cautioned hoteliers not to start their celebrations just yet. “Many of our clients have been scared by the news of gridlock in Washington and the negative economic climate in Europe. They’re not pessimistic, just cautious in setting their expectations for 2012.” However, he concluded, “We remain quite confident that 2012 will be another favorable year of growth for U.S. hotels.”
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