HENDERSONVILLE, Tennessee—More than 300 properties representing 158,300 rooms are defined as destination resorts in STR’s U.S. lodging census database. We classify these resorts as full-service upscale (chain scale) and above or upper-tier independent hotels. This exclusive group of properties is appealing to leisure and family vacation-oriented travelers, located in “resort” locales and is considered a group of self-contained destinations typically offering golf, tennis, ski, spa and beach-related amenities. More than 41 percent of resorts rooms are located in Florida followed by California with 12.2 percent.
Similar to U.S. industry performance, destination resorts are feeling the effects of the economic downtown and the altered travel patterns occurring across all industry segments. However, the segment continues to outperform the total U.S. in absolute levels of occupancy. Occupancy for the group was 61.5 percent compared to 58.2 percent for the total U.S. in the 12 months ending April 2009. The rate of decline in occupancy for the group has not fared as well. Destination resorts’ occupancies were down 8.2 percent versus industry declines of 7.0 percent. Of particular interest when examining occupancy fundamentals for the resort group is that “pure” room demand (nights sold) fell 7.5 percent on supply growth of less than 1.0 percent. Conversely, industry demand for rooms declined 4.3 percent on supply increases of almost 3.0 percent.
Following traumatic events in U.S. history, the destination resorts segment typically has been more negatively impacted than the U.S. industry as a whole. After 9/11, destination resorts experienced higher declines in all areas of performance except average daily rate. Similarly, after the turmoil in the banking industry, ADRs at destination resorts fell 4.6 percent to US$172.81 for the 12 months ending in April 2009, compared to total industry declines of 1.6 percent to US$104.04. Revenue declines reached double digits for the first time since the late 1990s for the segment: down 11.7 percent compared to a 5.8-percent reduction for the total U.S.
Resorts enjoy healthy occupancy and ADR premiums, with ADR reaching as high as 5.4 percent(for 12 months ending April 2005) and US$76.23 (for the 12 months ending April 2007) over the total U.S. industry during normal economic times. During the current downturn, they are continuing to maintain these healthy premiums, but report stronger losses in occupancy, demand, ADR and revenue.
If history is any indication, destination resorts will recover after this economic downtown by keeping their very location and amenities offered, keeping their prices competitive and boosting their marketing efforts to key and potential consumers in an attempt to bring back lost demand.