NEW YORK—Attendees of the American Hotel & Lodging Association’s 2011 Hospitality Leadership Forum Saturday were treated to a rapid-fire roundtable involving some of the hotel industry’s top researchers and prognosticators. What follows is an expert-by-expert rundown of highlights and key insights:
Vail Brown, VP of global sales and marketing, STR
Barring some setbacks in the Middle East, the global hotel industry is quite strong across the board, Brown said.
Through September, average daily rate posted growth of 3.8% in the Americas (U.S. dollar terms), 3.3% in Europe (euro terms), and 6.6% in the Asia/Pacific (U.S. dollar). The Middle East hotel industry posted an ADR decline of 1.4% in U.S. dollar terms.
Turning her attention toward the U.S. in particular, Brown said the industry is benefitting from favorable supply/demand fundamentals.
“Supply has slowed down. Demand came back stronger than we expected … and has remained strong ever since,” she said. “…We are breaking record levels of the amount of rooms sold on an annualized basis.”
However, macroeconomic instability and tougher year-over-year comparables has caused STR, which is the parent company of HotelNewsNow.com, to revise downward its forecast for year-end 2011 and 2012. (LINK TO RANDY/CHAD columns)
STR revised U.S. hotel industry forecast
| Supply | Demand | Occupancy | ADR | RevPAR | |
| 2011 Forecast | 0.7% | 4.7% | 4% | 3.6% | 7.7% |
| 2012 Forecast | 0.9% | 1.1% | 0.2% | 3.7% | 3.9% |
Warren Marr, managing director, PricewaterhouseCoopers LLP
After eight consecutive quarters of U.S. hotel demand growth outpacing the country’s gross domestic product growth, Marr is confident the hotel industry is headed in the right direction.
“Our confidence has increased that 2012 will be recognized as a year for stronger hotel pricing,” he said.
Increases will especially be felt in the higher-tiered chain scales, where strong occupancy levels will allow for stronger ADR increases. PwC anticipates an average 7.5% increase in revenue per available room for the luxury, upper upscale and upscale segments for 2012. The upper midscale, midscale and economy chain scales will see an average RevPAR increase of only 5%.
PwC U.S. hotel industry forecast
| Demand | Supply | Occupancy | ADR | RevPAR | |
| 2011 Forecast | 4.8% | 0.7% | 4.1% | 3.6% | 7.8% |
| 2012 Forecast | 1.6% | 0.4% | 1.3% | 5.2% | 6.5% |
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Mark Woodworth, president, PKF Hospitality Research
While change in hotel demand has long correlated with changes in U.S. employment, Woodworth pointed toward another variable that has followed closely of late with demand: corporate profits.
“When companies are making money, the demand for hotel rooms tracked up very, very nicely,” he said.
That has meant good things for demand growth thus far in 2011. Corporate profits are unlikely to be as strong during 2012, but healthy performance still promises another year of increases for the U.S. hotel industry, Woodworth said.
Before sharing PKF-HR’s forecast, the group’s president warned against reading too much into generalizations and averages.
“Market behavior varies as we move across markets, and that variation can be very, very substantial,” he said.
PKF-HR U.S. hotel industry forecast (best-case scenario)
That income defines in which segment a guest stays is indeed a myth, she said. Almost a quarter of guests staying in the economy segment during 2010 made more than US$100,000 in household income, for example.
Another myth: Corporate business is driving the economy. In reality, leisure is stronger and consisted of more roomnights sold during 2010.
The importance of millennials, another myth, is somewhat undeserving—at least in the near term, Klauda said. Millennial travelers only comprised 14% of all roomnights sold during 2010, compared to 40% from the baby boomer generation.
By 2020, however, millennials will surpass boomers in the adult population, though both they and boomers (as well as Gen Xers) will take roughly a third of the total market share.
And finally, the myth online channels dominate bookings proves true. A little more than 40% of all bookings in 2010 were made via walk ins or 800 number during 2010. Online channels made up approximately 52%.
Kendra Hayden, director, American Express Business Insights
Hayden provided an overview of inbound international visitor trends, which largely were up in frequency during the past year. Both leisure and business travel increased at a similar pace for 2010.
The top 10 feeder markets to the U.S. tourism industry accounted for 73% of all inbound travel. The top five markets in particular—Canada, the United Kingdom, Mexico, Australia and France—accounted for 56%.
J.P. Ford, president, Lodging Econometrics
“I am convinced that the economy will not turn negative and reverse its direction. We are where I believe we thought we would be,” Ford said to begin his presentation.
While the U.S. hotel industry pipeline has declined for three consecutive years, the third quarter of 2011 saw an increase of 35 projects over the second quarter.
“Is it a trend?” Ford asked. “No. The signaling of the bottom? Perhaps.”
U.S. hotel industry pipeline
| 2007 | 2008 | 2009 | 2010 | YTD Q3 2011 | |
| Rooms | 785,000 | 687,000 | 430,000 | 373,000 | 348,000 |
| Demand | Supply | Occupancy* | ADR | RevPAR | |
| 2011 Forecast | 4.6% | 0.6% | 60% | 3.8% | 8.1% |
| 2012 Forecast | 2.7% | 0.7% | 60.8% | 4.7% | 6.2% |
*Absolute occupancy level
Chris Klauda, VP of lodging services, D.K. Shifflet & Associates
Klauda analyzed several persisting hotel industry myths during her time at the podium.