Operating Income Stands Its Ground While Occupancy Falls

Coming off of years of robust growth, the hotel industry’s operating fundamentals are decelerating, according to an Americas MarketView report titled, “All Eyes on Washington as Financial Crisis Deepens,” by Raymond Wong, director of Americas research operations for CB Richard Ellis Inc. The report cites Smith Travel Research, noting that the research firm slotted occupancy rates as experiencing a 2.6 percent decrease year to date, and a year-over-year drop of 2 percent. Meanwhile, average daily rates have increased by 3.8 percent this year and 4.5 percent over the past 12 months. RevPAR has also picked up steam, up 2.4 percent year to date and 1 percent year-over-year. Even so, the reality is that the hotel sector’s growth rate has declined, compared with recent years. “The outlook for limited service hotels is relatively positive for 2009, but full-service properties may suffer on the whole as businesses cut back on discretionary expenses, including corporate travel,” the report states. “Limited service options will absorb some of this demand due to a trickle-down effect.”