Smith Travel Research Sees U.S. Hotel Recovery In 2011

Smith Travel Research last week issued a forecast calling for the U.S. hotel industry's rates, revenue and occupancy to begin a recovery in 2011.

The firm said that the current construction pipeline should be mostly completed by 2011, with growth for the year projected at 0.8 percent. At the same time, demand will grow by 3.2 percent during 2011. This will lead to a 2.4 percent year-over-year increase in occupancy, a 3 percent increase in average daily rate and a 5.5 percent increase in revenue per available room, according to the report.

"For the first time since 2007, occupancy will improve in 2011," Smith Travel Research President Mark Lomanno said in a statement. "With that, we think that finally the industry will have the ability to raise room rates. It won't nearly come close to getting back to 2007 levels but will at least be the beginning stages of improvement."

The firm also slightly improved its rate and revenue expectations for the full year of 2009. It now expects rates for the year to be down 8.9 percent compared with 2008, a less steep drop than the 9.7 percent decline in the firm's July forecast. With better-than-expected rate performance, STR said RevPAR should drop by 17 percent this year, marginally better than the 17.1 percent decline forecast in July.

STR still expects all three metrics to continue their decline in 2010, however. The current forecast calls for occupancy to drop 0.2 percent, average daily rate by 3.4 percent and RevPAR by 3.6 percent compared with this year's levels.

—Nielsen Business Media