Industry forecast: Hotel rates won’t stay as low as travelers hoped


The hotel industry could be bouncing back more quickly than originally expected. That means rates won’t stay as low as travelers might have hoped.

On Tuesday, Smith Travel Research, a hotel-industry research and consulting firm, revised upward its outlook for 2010.

Because hotel occupancy levels currently look better than STR expected in the U.S., “we think the recovery will pick up its pace during the second and third quarters of this year, then it will moderate,” says Mark Lomanno, president of STR.

STR predicts that occupancy will increase 1.9% in 2010 to 55.8%. The company’s previous forecast anticipated occupancy would remain flat year-to-year.

That means average daily rates will only drop 2.3% in the U.S. Earlier this year, STR expected them to drop 3.2%.

Revenue per available room, a measure used to gauge a hotels revenue, will only decrease 0.5% instead of the previous forecast of a 3.2% decrease.

When hotels “see demand growth numbers in the 4,5 or 6% range for a few months it will embolden them to increase ADR,” or average daily rate, says Mr. Lomanno.