average rate

Five Year US Hotel Occupancy – Average Rate – RevPAR Comparison

by RobertKCole on January 7, 2011

First, thanks for all the positive feedback from my earlier post, What’s Wrong With the US Hotel Industry Recovery? Regardless of the pithy and enlightened analysis provided (my personal and unbiased self-assessment) there was a select group of readers that remained unappeased.

More Numbers
Creative Commons License photo credit: Patrick Gage

For those who requested a broader statistical comparison, all I can say is 'You want more numbers... Are you serious?'

There appear to be two categories of hotel industry data aficionados – gourmets and gourmands. You may know them better as the Smith Travel Research, Colliers PKF and PricewaterhouseCoopers fanboys & fangirls you see hanging out by the stage at the Hotel Data Conference.

The gourmands revel in devouring every data point in sight. They like their data raw and in large quantities. One would imagine these folks drink their wine from boxes and buy sides of beef that they cut themselves. Not afraid of getting their hands dirty, they have no use for utensils, but prefer to dig their teeth directly into their meal like lions savaging their prey.

The gourmets are a but more refined – They savor the nuanced flavors of the freshest, meticulously prepared, and most creatively presented information available. They prefer the finest cuts from the finest chefs, with portion size and cost being irrelevant as long as the quality is there. They even look at well aged data like wine – given expert handling and loving care, even the oldest statistics can yield valuable insights and points of comparison for the latest growths.

Despite my initial inclination to help organize interventions to get these individuals into some form of hospitality stats junkie 12-step program, I cooked up a few more data dishes as a belated holiday buffet. continue reading →

Tagged as: average rate, history, hospitality, hotel, occupancy, recession, RevPAR, statistics, travel, trends

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What’s Wrong With the US Hotel Industry Recovery?

by RobertKCole on December 20, 2010

If the US economy is in recovery, why is the US hotel industry still in rehab?

Online Hotel Booking Junkie
Creative Commons License photo credit: nataliej

It starts out innocently enough... A couple spot promotions and internet-only specials. Then it spirals into merchant rates, opaque deals and most-favored nations clauses - such goes the story of hotels becoming online travel volume junkies...

A year ago, I authored a post titled US Hotel Performance – Time for a Baseline Reset? – it was a follow-up to a post from four months earlier titled US Hotel Industry Recession Enters New Rate Erosion Phase.

In the 12-16 months since those posts were written, I am very pleased to report that hotel demand in 2010 has grown more rapidly than predicted by myself, Smith Travel Research, PricewaterhouseCoopers and Colliers PKF Hospitality Research – I love being wrong – especially among such esteemed company.

However, this better than expected uptick has resulted in considerable discussion painting a rosy picture of the US hotel industry recovery. Based on many glowing reviews citing double-digit occupancy percentage (Occ %) growth and solid increases in Revenue per Available Room (RevPAR), one can easily arrive at the conclusion that the US hotel industry recovery is in full swing and that the industry is nearly back to normal.

Unfortunately, most of these evaluations only reference US hotel industry performance relative to 2009, which was the worst year on record for hotel performance. It is not particularly beneficial to benchmark the industry against those record depressed levels, so it is much better to frame the recovery relative to hotel performance in earlier periods.

On that basis, the US Hotel Industry has recovered to somewhere near 2005/2006 business levels.

2011 will undoubtedly be a challenging year for the US hotel industry. Certainly results will exceed 2010, and be well beyond the despair of 2009, but nowhere near levels that could lead one to characterize the hospitality business as healthy. continue reading →

Tagged as: average rate, history, hospitality, hotel, occupancy, recession, RevPAR, statistics, travel, trends

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Travel Industry Site Traffic Rebound – Not a Hotel Slam Dunk

by RobertKCole on December 15, 2009

Compete recently presented a report based on data through September 2009, concluding that different travel categories (hotel, cruise, air, car rental) have recovered at different rates. Hotels and cruises were highlighted as recovering more quickly than airlines and car rental.

Basketball Tip
Creative Commons License photo credit: Emery Way

US Hotels are having to jump through hoops to fight competitors and Online Travel Agencies for leisure customers seeking unprecedented deals

It may give some comfort that year-over-year website traffic is increasing in the travel sector. Understanding that this is normally considered a leading indicator, this could serve as a basis for optimism. Unfortunately, for the US hotel industry, increased website traffic has not translated into incremental bookings and the business transacted online is at dramatically lower average rates.

Compete’s panel of Two Million US internet users should hypothetically provide a statistically significant barometer for the US hotel activity levels and would ideally correlate well with the performance of the US hotel industry. Unfortunately, it does not. The US hotel industry is a complex, multi-dimensional vertical that sources business through a variety of distinct market segments and distribution channels.

What the analysis captured was a radical change in consumer hotel travel shopping practices in light of a deep economic recession. Several different factors contributed to the disruptive change impacting the US hospitality industry that emerged in November 2009 and has continued over the past year: continue reading →

Tagged as: average rate, Compete, hotel, occupancy, online travel companies, recession, RevPAR, statistics, travel search, trends

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US Hotel Performance – Time for a Baseline Reset?

by RobertKCole on November 12, 2009

Smith Travel Research (STR) does an exceptional job of tracking and sharing US hotel industry performance statistics on a weekly basis. October and early November normally represent the highest occupancies and average rates for US hotels as corporate travel and meetings business kicks into full gear. Unfortunately, 2009 is different. Over one year after the collapse of Lehman Brothers, even with the US economy showing some signs of stabilization, the United States hotel industry appears to be getting a preview of what can only be described as “The New Normal.”

Empty Hotel Lobby
Creative Commons License photo credit: viviannguyen

If a lamp falls in a hotel lobby, does it make a sound if there is no one there to hear it?

Last July, I blogged about my concerns that hotel room rates were declining faster than occupancies. That undesirable trend has now continued in all except three of the past 19 weeks – and those three weeks can be explained by holiday date shifts.

Looking at the country as a whole, hotel average room rate and occupancy percentage declines have not yet stabilized – even compared against the lower basis established by last year’s precipitous drops. The declines are not as steep as those sustained last year, but they have not yet bottomed out.

Before digging into the significance of the weekly trends and their relationship to performance experienced in prior downturns, there are now predictions available from the major hospitality industry consulting groups for 2009 and 2010 performance to consider.

STR’s October forecast projected 2009 occupancy to decline by 8.4% to 55.4%, ADR to fall 9.7% to US$96.43, and RevPAR to decrease 17.1% to US$53.43. These were the result of a projected 3.0% growth in 2009 US hotel room supply, accompanied by a 5.5% drop in guest room demand.

Below is a breakdown of actual US hotel industry performance on a quarterly basis, including STR’s forecast for the full year 2009. All three key metrics have fallen in each quarter throughout the year, with the rate of decline slowing for occupancy while the average rate declines accelerate.

STR 2009 US Hotel Performance by Quarter (YOY Comparison)

Occupancy

Occ %Chg

ADR

ADR %Chg

RevPAR

RevPAR %Chg

1st Quarter

51.4%

-10.9%

$100.13

-7.7%

$51.44

-17.7%

2nd Quarter

57.8%

-10.9%

$97.37

-9.7%

$56.25

-19.5%

3rd Quarter

60.5%

-7.9%

$96.84

-9.8%

$58.61

-16.9%

2009 Forecast

56.6%

-8.4%

$98.01

-9.7%

$55.48

-17.1%

Source: STR continue reading →

Tagged as: average rate, hospitality, hotel, occupancy, recession, RevPAR, statistics, trends

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US Hotel Industry Recession Enters New Rate Erosion Phase

by RobertKCole on July 25, 2009

2009 will likely rank as one of the worst years for the United States hospitality industry in modern history. Reeling from a sharp falloff in corporate, group and leisure travel demand as a result of the global financial crisis, hotel occupancies have been falling and hoteliers throughout the nation have been responding by lowering room rates to retain customers and shift share from competitors. The week of June 27, this drop off entered a dangerous new phase – when compared to the same week, year over year, the national hotel average room rate began to fall more rapidly on a percentage basis than the average hotel occupancy percentage. This trend has now continued over the past four weeks.

Burning Money
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Hotel average rates are falling faster than occupancy rates - this could get ugly

Tracking the Average Daily Rate (ADR), Average Occupancy Percentage (Occ%) and Revenue per Available Room (RevPAR), based on weekly statistics published by Smith Travel Research (STR), over the last several years provides some insight into the how the recession is developing and the challenges that will face hotel owners and operators when a recovery begins to develop.

The US hotel industry is highly seasonal and some industry observers have mistakenly interpreted a June uptick in booking volumes as a signal that a bottom may have been reached and that if a recovery was not around the corner, at least the bleeding had subsided. Unfortunately, based on a review of 12-month moving averages, I cannot share that opinion. All three indicators, ADR, Occ% and RevPAR, on a 12-month moving average basis, have continued the slide that began months ago. continue reading →

Tagged as: average rate, hotel, occupancy, recession, RevPAR, Smith Travel Research, trends

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