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By Michael B. Baker
Multibrand hotel companies are reporting significant year-over-year drops in rates and revenue for the second quarter of 2009, as industry analysts continue to move expectations for the year downward.
Smith Travel Research in July said U.S. hotel average daily rates will drop by 9.7 percent year-over-year in 2009, revenue per available room will be down 17.1 percent and moderate declines would continue through 2010. In April, the firm had forecast a RevPAR drop of 9.8 percent and a rate drop of 3.6 percent. STR also said occupancy will drop 8.4 percent to 55.4 percent this year, slightly down from the 56.5 percent it forecast in April.
Recent hotel company earnings reports support those expectations.
Starwood Hotels & Resorts last month reported that system-wide RevPAR dropped 27.7 percent for the quarter. Swine flu concerns cost Starwood about $10 million in revenue during the quarter, says Starwood CEO Frits van Paasschen.
Average daily rates for the quarter dropped by 18.4 percent worldwide. Luxury and upper upscale brands saw the steepest drops. Occupancy was down 8.1 percent worldwide, though W dropped only 4.4 percent.
Marriott International last month reported more than a 20 percent decline in revenue per available room and double-digit percentage rate drops for its upper-tier properties in North America during the second quarter. Compared with the second quarter of 2008, worldwide RevPAR fell by 23.6 percent system-wide.
Marriott president and COO Arne Sorenson said event cancellations subsided, but attrition continued to worsen, lowering group RevPAR 25 percent.
Both transient and group leisure travel, however, were up. "It's still too soon to say we're seeing green shoots," Sorenson says, "but to take the analogy further, at least we have some evidence that the planting season is not too far off."
Wyndham Worldwide fared slightly better in terms of RevPAR, which was down 14.7 percent system-wide for the quarter. Occupancy was down 10.4 percent, and average daily rate dropped by 7 percent. Similarly, the mostly mid-price Choice Hotels International reported RevPAR down 15.7 percent and average daily rate down 4.1 percent.
In 2010, STR forecasts rates will drop 3.4 percent, occupancy will drop 0.3 percent and RevPAR will fall 3.7 percent. Group business will have to return to at least 90 percent to of its levels prior to the downturn, which will in turn generate transient demand, before hotels once again gain any pricing leverage, said STR president Mark Lomanno.
"On an inflation-adjusted basis, it's probably going to be longer than six years before the rates get back to 2007 levels," according to Lomanno. "Absent some other event, it looks like we're bouncing along the bottom."
—Nielsen Business Media
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Hotel Chains Report Declining Rates, Revenue
Aug 24, 2009By Michael B. Baker
Multibrand hotel companies are reporting significant year-over-year drops in rates and revenue for the second quarter of 2009, as industry analysts continue to move expectations for the year downward.
Smith Travel Research in July said U.S. hotel average daily rates will drop by 9.7 percent year-over-year in 2009, revenue per available room will be down 17.1 percent and moderate declines would continue through 2010. In April, the firm had forecast a RevPAR drop of 9.8 percent and a rate drop of 3.6 percent. STR also said occupancy will drop 8.4 percent to 55.4 percent this year, slightly down from the 56.5 percent it forecast in April.
Recent hotel company earnings reports support those expectations.
Starwood Hotels & Resorts last month reported that system-wide RevPAR dropped 27.7 percent for the quarter. Swine flu concerns cost Starwood about $10 million in revenue during the quarter, says Starwood CEO Frits van Paasschen.
Average daily rates for the quarter dropped by 18.4 percent worldwide. Luxury and upper upscale brands saw the steepest drops. Occupancy was down 8.1 percent worldwide, though W dropped only 4.4 percent.
Marriott International last month reported more than a 20 percent decline in revenue per available room and double-digit percentage rate drops for its upper-tier properties in North America during the second quarter. Compared with the second quarter of 2008, worldwide RevPAR fell by 23.6 percent system-wide.
Marriott president and COO Arne Sorenson said event cancellations subsided, but attrition continued to worsen, lowering group RevPAR 25 percent.
Both transient and group leisure travel, however, were up. "It's still too soon to say we're seeing green shoots," Sorenson says, "but to take the analogy further, at least we have some evidence that the planting season is not too far off."
Wyndham Worldwide fared slightly better in terms of RevPAR, which was down 14.7 percent system-wide for the quarter. Occupancy was down 10.4 percent, and average daily rate dropped by 7 percent. Similarly, the mostly mid-price Choice Hotels International reported RevPAR down 15.7 percent and average daily rate down 4.1 percent.
In 2010, STR forecasts rates will drop 3.4 percent, occupancy will drop 0.3 percent and RevPAR will fall 3.7 percent. Group business will have to return to at least 90 percent to of its levels prior to the downturn, which will in turn generate transient demand, before hotels once again gain any pricing leverage, said STR president Mark Lomanno.
"On an inflation-adjusted basis, it's probably going to be longer than six years before the rates get back to 2007 levels," according to Lomanno. "Absent some other event, it looks like we're bouncing along the bottom."
—Nielsen Business Media
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