Numbers tell a 'depressing' story

New York--As many industry experts anticipate an upturn in the market, data researchers continue to study how drastically the industry fundamentals have fallen over the past year.

President of Smith Travel Research Mark Lomanno and president of HVS Stephen Rushmore presented their annual analysis of lodging statistics at the NYU Investment Conference. According to STR numbers, as of June, a snapshot of the industry’s fundamentals in the United States compared to the same time last year looked like this:

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Occupancy 2009 YTD: -11 percent

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Average Daily Rate 2009 YTD: -8.1 percent

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Revenue per available room 2009 YTD: -18.2 percent

Commenting on a slide showing the percent change of key performance indicators over the past year, Lomanno said, “This is probably one of the more depressing charts we’ve shown at the NYU conference in about 30 years.”

Lomanno did give some positives to take away: demand declines had flat-lined over the past four months; ADR declines had flat-lined for the past six weeks; transient numbers haven’t declined as rapidly as group business; and new hotel growth has leveled off at 2.9 percent, meaning the supply/demand gap will only shrink moving forward.

“One month doesn’t make a trend, but if you look at the April numbers, there’s actually a slight improvement. We think that same thing will happen in May,” Lomanno said. “If you look at the data that way, we’re starting to see signs that we’re at a bottom. Not necessarily saying we’re ready to shoot out or anything, but at the same time, it’s hard to improve without stabilizing.”

Following the trend that leisure business usually receives a boost in the summer, Lomanno said vacationers might actually lead the recovery, which is atypical of an industry downturn. Furthermore, he said, as promotions litter the market and rates dip, many leisure travelers may actually trade up chain scales, which could boost a beat-up luxury segment.

Ed Walter, CEO of Host Hotels & Resorts, said the luxury segment will rebound. 

“It’s going to struggle for the next couple of years, but luxury has historically rebounded and rebounded very strongly once you come out of the downturn,” he said. “It gets hit the hardest when you go into a downturn, but if you look at luxury over the last 20 years, it has significantly outperformed the industry.”

Starwood Hotels & Resorts CEO Frits van Paasschen said luxury will come back because people enjoy treating themselves.

“As soon as possible feel a little more comfortable, they’ll come back,” van Paasschen said. “I’m pretty confident that luxury will re-emerge largely in the form it was before.”

jfreed@questex.com