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ATLANTA-With economists predicting a recession on the horizon, locally based PKF Hospitality Research is lowering its RevPAR forecast for 2008 from an increase of 4.5% to 3%. The prediction was revised based on projections by Moody’s Economy.com, the company’s primary economic forecasting agency.

In addition to the looming recession, turmoil in the capital markets and the increased price of oil are also have a negative impact on the economy. The report also notes that real personal income growth is projected to be 1.6% for 2008, instead of a previously predicted level of 2.6%.

Despite the predictions, PKF Hospitality Research president Mark Woodworth says that most US hotels will experience increases in revenue and profits, although at a more modest pace. He adds that the first quarter is expected to be moderately positive for hotels, but will deteriorate throughout the year. Although conditions are expected to improve by the first quarter of 2009, he says.

Of the 50 major US markets that PKF prepares a Hotel Horizons forecast report, hotels in 29 of those markets are expected to see RevPAR growth at or above the pace of inflation. “We realize that news of national gains in demand and profits will not appease the owners of hotels in competitive markets like Fort Worth or Long Island,” Woodworth says, in a released statement. “However, if you are a lodging investor in Austin or Phoenix, strong increases in ADR should lead to profitable gains in revenue.”

The PKF report notes that the revised RevPAR projections come at a time when the industry is experiencing modest increases in the supply of lodging. In 2008, PKF estimates that a net count of 115,000 new hotel rooms will become available. With the demand for hotel rooms lagging the supply of new inventory, the US national average occupancy rate is expected to decline a full point from 63.2% in 2007 to 62.2% in 2008.

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