Recovery Continues for U.S. Hotels, CB Richard Ellis Says

For U.S. hotels, the economic recovery will continue in 2011, and begin accelerating in 2012, according to a new report from real estate services firm CB Richard Ellis (CBRE), the results of which were released last month.

According to the "Annual Trends 2011" report, revenue per available room (RevPAR) at full-service hotels will increase 1.6 percent this year and 4.4 percent over the next two years, rising to $94.21 in the third quarter of 2011 and $98.34 in the third quarter of 2012. At limited-service hotels, meanwhile, RevPAR will grow 2.6 percent this year and 6.5 percent over the next two years, reaching $48 in the third quarter of 2011 and $51.12 in the third quarter of 2012.

"The significant growth of room rates over the next couple of quarters, combined with continued occupancy gains, will bring RevPAR levels closer to their previous peak in 2007," said CBRE Economist Abigail Rosenbaum. "It will take slightly longer than in earlier recoveries, but we expect that by 2014 both full-service and limited-service RevPAR will be expanding."

Other findings, according to CBRE:

• As hotels recover, average daily rate (ADR) improvement will account for a larger share of RevPAR growth.

• San Diego, Atlanta, West Palm Beach, Nashville and Orlando are among the markets where CBRE expects continued health RevPAR growth.

• Occupancy likely will diminish modestly in 2011, due mostly to rising room rates.

• In the near-term, demand for limited-service hotels will continue to surpass demand for full-service hotels.

• New hotel supply is no longer a major threat to hotels' recovery, since development pipelines are diminishing.