NEW YORK—The data analysts never have a shortage of numbers to share. At least this time around it was positive news presented on Day 1 of the 33rd Annual New York University International Hospitality Industry Investment Conference held at the Marriott Marquis.
Mark Lomanno, STR
The key indicators for year-end 2010 compared to year-to-date April show the United States is starting to see an average daily rate recovery, said Mark Lomanno, CEO of STR.
“It’s still sluggish compared to other regions, but we see now a third of (revenue per available room) growth is due to ADR growth, and it will continue as a larger percentage of RevPAR growth,” he said.
Demand is back with gusto.
In the 12-month period through April, the industry saw more rooms sold than ever before, Lomanno said.
“The industry is much more likely to revert back to the historical demand growth rates, which is positive,” Lomanno said. “That’s going to jettison movement forward.”
There was an annualized compound growth rate for demand of 2.7% between 1992 and 2000 and also the 2003-2005 period.
Lomanno also shared some preliminary findings from STR’s Booking Channel Analysis, which analyzes booking behavior through various booking channels, such as online travel agencies, the global distribution systems and proprietary brand websites.
The data show the majority of demand and revenue for chain hotels in 2010 came from property-direct channels, with 54.3% of demand and 46.5% of revenue.
Conversely, the online travel agency retail-merchant channels accounted for 4.6% of demand and 4.3% of revenue (paid directly to the hotel, not what the consumer pays) and the OTA opaque channel accounted for 2% of demand and 1.2% of revenue.
Markets with the greatest OTA combined demand in chain hotels for 2010 included: the Florida Keys; Maui Island, Hawaii; San Francisco; Anaheim-Santa Ana; and Kauai Island, Hawaii.
Lomanno said this suggests OTA activity is higher in leisure and group destinations.
STR’s projections (as percent change compared to prior year):
ADR should exceed US$100 again this year, reaching US$102.21, according to Lomanno. It should exceed the previous peak of US$107.35 realized in 2008 by the end of 2012.
After accounting for inflation, it will have taken more than four years to get back to 2008 levels, Lomanno said.
Steve Rushmore, HVS
“What a difference six months makes,” said Steve Rushmore, president and founder of HVS. “Specifically the last six months of 2010—that’s where we saw the turnaround in the U.S.”
The value per room of a typical hotel dropped 31% in 2009, increased 17% in 2010 and is estimated to increase 28% in 2011 for an actual value of US$84,000 per room, according to Rushmore.
All 52 markets covered by HVS will see room value increase this year, Rushmore said.
“We should be back up to the peak by 2012,” he said. At that time, value per room for the typical hotel is expected to be US$104,000. The most recent peak was in 2006 when value per room was US$99,000.
In HVS’s study of major hotel transactions, year-to-date 2011 there were 54 hotels with 15,760 rooms transacted so far.
“This is 14 transactions higher than we were at this time last year,” Rushmore said. “From a brokerage point of view, things are getting better. Value per room is much higher than the previous year. We also can see that transactions are at larger hotels at higher prices per room.”
Rushmore said he wouldn’t sell in any market today. “Hold on until 2012, 2013 and sell in those cities that don’t have growth potential,” he said. He listed: Albuquerque, New Mexico; Buffalo, New York; Norfolk, Virginia; Nashville; and St. Louis as examples.
He said the time is now to start building to open in 2013-2014—if you can get financing.