Most Markets Will Suffer
“In keeping with our long-standing view that the lodging industry is a street corner business, we focused heavily on the outlook for the major hotel markets in the nation,” Woodworth said. “We have developed 100 unique econometric forecasting models that project the performance of both the upper- and lower-tier properties in 50 of the largest cities in the country.”
Except for New Orleans, all of the 50 markets analyzed by PKF-HR are forecast to suffer a decline in RevPAR in 2009. The main culprit for the decline in RevPAR is the forecast fall-off in demand. In 40 of the 50 markets, PKF-HR is forecasting a lower number of rooms to be occupied in 2009 as compared to 2008. In 18 of these markets, an above average increase in the supply of hotel rooms exacerbates the competitiveness of the marketplace.
“When analyzing the declines in RevPAR forecast for the nation’s major markets, it certainly appears that warm-weather, leisure-oriented, and seasonal markets are most vulnerable in 2009,” Woodworth observed. Five of the top seven forecast city declines in RevPAR are expected to occur within the State of Florida. The other two markets in the top seven are Phoenix and Oahu. “Further reductions in airline capacity amplify the negative operating environment in these markets brought on by weak economic conditions.” Previous research by PKF-HR found that a 1.0 percent increase/decrease in airline capacity yields a 0.39 percent increase/decrease in lodging demand at the national level.
Beyond 2009
Come 2010, the relevant economic indicators are forecast to begin to drive lodging demand upward. This will happen simultaneously with diminished levels of new supply, thus resulting in gains in occupancy and, eventually, pricing power. “Given all the lodging industry will have to deal with in 2009, it is hard to look beyond a 12-month window. However, a glance at 2010 does reveal the beginning of an upward trend,” Woodworth concluded.
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http://www.hotel-online.com/News/PR2008_4th/Dec08_PKFRevPar.html
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