Report: RevPAR to Finally Rise in 2011

RevPAR is expected to grow by 7.3 percent in 2011, the first such increase in four years, according to the latest forecast from Jones Lang LaSalle Hotels. The report indicates that RevPAR for 2009 has dropped 17.4 percent, while the decline will slow to 2.4 percent next year. "The combination of soft demand and increased supply will cause hotel owners to continue to discount rates in an attempt to stimulate demand and build market share," says Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels, in a statement.

In terms of supply, approximately 145,000 new rooms entered the U.S. hotel market during 2008. Supply this year is expected to increase by 2.6 percent, softening to 1.0 percent during 2010 and slowing further to 0.5 percent in 2011 as attrition rates for projects currently not yet in their final planning stage can be as high as 90 percent. In addition, the number of room cancellations and postponements during the second quarter of 2009 increased 59.1 percent over the same period in 2008.

"The signs of upward momentum in 2011 may help bridge the gap between next year's expected low point and a much-needed light at the end of the tunnel for struggling owners and operators," says Adler.

Jones Lang LaSalle Hotels also issued a five-year outlook for six major markets in the U.S. "The metropolitan areas surveyed are all expected to experience a further RevPAR decline during 2010, ranging from an expected 5.6 percent drop in the New York metro area to a 0.8 percent softening in the greater San Francisco market," Adler says. RevPAR in major U.S. markets is expected to post a return to growth during 2011 with Chicago and Washington D.C. among the strongest of the cities studied, with expected growth rates of 5.7 percent and 4.6 percent, respectively.

Source: Hospitality Design Magazine