X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

ATLANTA-Hotel revenues will be in the basement for another year at least but the lodging industry will rally in 2003 and 2004, boosting revenues per available room to record levels, according to new joint research by Atlanta-based Hospitality Research Group and Torto Wheaton Research of Boston.

Markets that may be hit the hardest are Boston, Dallas, Honolulu, Los Angeles, Miami, Phoenix and Seattle.

Until the turnaround occurs, occupancies at full-service hotels will average 63.5% and at limited-service properties, 60.9%, the lowest levels since the 1991 Gulf War. The industry generally considers 65% occupancy as the break-even point at most properties.

“Hotels are currently being hit with a one-two punch,” Dr. Jack Corgel, managing director of applied research at HRG, says in a prepared statement. “In addition to the current recession, the hotel market is enduring a stigma brought about by the current fear of travel.”

Full-service hotels will be hit hardest. Guest demand will be a negative 9.8% among the full-servicers; and a negative 5.8% in the limited service sector.

“These declines in demand related to the stigma effect will largely dissipate over the next two years,” Corgel predicts.

Based on guest demand during the Gulf War 10 years ago, the researcher says “the most significant and visible effect” for hotels will be RevPAR. “The impact on profits will vary substantially by property type, local market area and net levels of accommodated demand,” Corgel says.

RevPAR declines for limited-service hotels will be 9.1% and 13.3% for the third and fourth quarters of this year versus the same 2000 periods. A further reduction of 14.5% is forecast for first quarter 2002.

For full-service hotels, RevPAR will shrink by 18.4% and 20.4% in the third and fourth periods of this year. Second quarter 2001 saw a decline of 6.2%.

Hospitality Research Group is the research affiliate of San Francisco-based PKF Consulting.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.