The Expert: When Will U.S. RevPAR Grow Again?
- Apr 28, 2009
Jones Lang LaSalle Hotels recently published a five-year forecast for average daily rates, occupancy and RevPAR for the United States and the six major markets of Chicago, Los Angeles, Miami, New York City, San Francisco and Washington, D.C. This forecast was based on an analysis of economic indicators that show strong correlation to hotel performance, including gross domestic product, gross metro product, per capita income, non-farm payroll, the S&P 500 Index and room supply.Jones Lang LaSalle Hotels projects that U.S. RevPAR will decline 12.1 percent in 2009, the result of a 7.4 percent average-daily-rate decline and a 5.1 percent decrease in occupancy. Alongside an eventual stabilization of employment levels, RevPAR is expected to bottom out in 2010 and record 0.6 percent growth for the year, driven by a gradual increase in demand. In 2011, RevPAR is projected to grow 4.7 percent, the highest growth rate since 2007. By 2013, it is expected to exceed its previous peak achieved in 2007.Of the six metropolitan markets analyzed, New York City and Miami are expected to post the highest RevPAR declines during 2009, at 26.5 percent and 21.3 percent, respectively. Owing to increased government-related business and strong performance surrounding the inauguration, Washington, D.C., is forecast to see a decline of 9 percent this year, the smallest drop among the cities analyzed.The silver lining for existing hotel owners will be the significant attrition to the supply pipeline in 2009 and beyond. Approximately 102,000 new rooms are expected to enter the market this year, representing 2.2 percent of existing supply. That is lower than the growth rate recorded in 2008. As such, new room openings are expected to have peaked in 2008, and the rate of room openings should continue to trail off through 2011, leading to quicker and stronger recovery.Thomas Fisher is managing director for Jones Lang LaSalle Hotels.