CHICAGO—The American Hotel & Lodging Association’s Summer Summit brought together a comprehensive look at industry metrics yesterday provided by the foremost research organizations in the hotel industry at the Chicago Hilton.

STR

Vail Brown, VP of global sales and marketing for STR, presented dismal figures that indicate revenue per available room decreases are at 10.3 percent for the 12-month moving average as of May, but have not yet reached a peak.  

STR's Vail Brown

“We do feel that it will surpass the 10.5-percent decrease reached in 2002,” Brown said.

The year-to-date changes through May for key performance measurements are: Supply: +3.2 percent; demand (-8.3 percent); occupancy (-11.2 percent); average daily rate (-8.5 percent); and revenue per available room (-18.7 percent).

“We can see that demand is not moving up and down as much as earlier in the year, but we’re not sure about rate fluctuations just yet,” Brown said.

To view Vail Brown's presentation, click here (user name and password required; free registration available)

D.K. Shifflet & Associates

George Harmon, president of DKSA, presented consumer-based travel trends and said the total number of travelers declined in 2008 from 122 million in 2007 to 114 million in 2008.

Non-group business didn’t decline until fourth quarter of 2008, but group business started its decline in the second quarter, according to Harmon.

He said that while business travel is decreasing, the length of stay is up: There was a 9-percent drop in one- to two-night stays, and a lift in 5+-night stays in 2008.

Gen Xers and baby boomers are buying the majority of room nights in business travel, Harmon said.

To determine if travel behavior has changed, the company surveyed travelers at the end of 2008 and first quarter. The findings:

• 70 percent reported they had not made any changes, which was consistent across age and income groups.
• 10 percent had cancelled a trip due to an expense, but those ages 55 and up and those with US$100,000 and up incomes were less likely.
• 13 percent kept original plans but reduced expenses.
• There is a growing percentage that takes advantage of a discount travel offer (5 percent in December, 10 percent in March).

Harmon’s forecast for room-night demand was another 4.2-percent decline this year.

Business room nights will drop 5.9 percent over 2008 levels; leisure room nights will see a 2.9-percent decline over last year.

PKF Hospitality Research

Mark Woodworth, president of PKF Hospitality Research, provided insight into economic indicators.

The employment recovery has been delayed, he said, citing Moody’s Economy.com.

With Moody’s forecast of 15 quarters for employment to get back to previous peak, the U.S. won’t reach that until 2012, Woodworth said.

“Which means there are many more lost jobs to come, and the unemployment peak will be in January 2010 at 9.8 percent,” he said. While this percentage doesn’t exceed historic highs, there will be more people out of work because there are many more total jobs than there were during previous recessions.

PKF’s forecasts are built on the assumption that the recovery will most likely take a U shape, and that 2010 will bring the upswing in economic growth.

Woodworth again emphasized the fact that the current recession is rare in its triple threat of a credit crunch, housing price bust and equity price bust.

“This will last two to three times more quarters than we usually expect,” he said.

Lodging Econometrics

Pat Ford, president of Lodging Econometrics, gave a comprehensive look at how banking affects development. The tightening of bank lending after 2007—when concerns first surfaced—resulted in a different landscape.

“Banks were not only tightening, but they’re out of the lending business, there has been some slight moderation from the peak, but this will persist well into 2010,” Ford said.

And the talk of green shoots?