Categorized | Hotels

U.S. hotels’ revenue to rise 7.2% in 2011 as demand and room rates increase…

Posted on 22 September 2011

Despite high levels of unemployment and waning consumer confidence, U.S. hotels will charge about 3.2% more in room rates this year, resulting in a 7.2% increase in revenue per room, according to a monthly report released Wednesday PKF Hospitality Research, an industry consulting firm.


In upgrading from the 6.9% revenue increase it estimated in June, the firm says business travelers – considered to be more affluent and have higher levels of education – are less affected by economic uncertainties than the general public.


“The unemployment rate among educated workers who make up a large share of the traveling public is less than 5%, and employed workers are receiving real wage increases,” says John Corgel, a real estate professor at the Cornell University School of Hotel Administration and senior advisor to PKF-HR. “Total real personal income has already recovered and surpassed its historical peak. Moreover, corporate profits keep soaring to new highs.”


U.S. lodging demand has averaged year-over-year gains of 6.9% per quarter since the beginning of 2010, far surpassing the long run average of 1.8%, says Mark Woodworth, the firm’s president.


Lodging demand will rise 4.5% in 2011 while the supply of new rooms is projected to increase just 0.6%, the firm estimates. In 2012, demand is expected to rise another 3.1%, with a 0.7% increase in room inventory.


With demand growth outpacing supply, occupancy for U.S. hotels is projected to increase from 57.6% in 2010 to 59.8% this year and 61.2% in 2012.


Customers will pay more as hotels report higher occupancy levels. The average daily rate will rise 4.8% in 2012, following the 3.2% increase projected for this year, the report says

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