The first day of the Great Data Dump of 2009 went off without a hitch Tuesday as a couple of hundred people gathered at the Renaissance Nashville to hear STR’s take on how the industry is performing.
With a large percentage of attendees bearing titles that reflect revenue management and/or pricing strategy duties at their companies, the most obvious message they heard confirmed that hoteliers have been too quick to lower rate during the past year. It’s no surprise the conference has taken this tone as STR execs have been beating that drum for quite some time.
One bit of info from STR President Mark Lomanno hammers the point home. According to Lomanno, year-to-date occupancy on Friday and Saturday nights has actually increased 0.3 percent from the same time period in 2008. However, YTD average daily rate for Fridays and Saturdays has declined 15.8 percent. While there can be some valid arguments made that the reduced rate has driven some of the occupancy gain, it’s hard to rationalize that hoteliers needed to drop rates through the floor.
The conference has had a fairly upbeat tone compared with the investment conferences the industry has had this year. The overall feeling from attendees here appears to be one that the industry is bouncing along at the bottom of the cycle, and while there is no way to tell when the climb from the muck will commence, at least the bad news has stabilized.
Lomanno emphasize that during his U.S. hotel industry overview Tuesday afternoon. “There’s a point where the industry won’t go below on a national average basis, and it looks like we’re at that point,” he said.
There were two bits of info from Lomanno that has to be a concern for hoteliers, though. First, he said the number of hotel closings is below the average number of closings for the past few years, mostly because there are no alternative real-estate uses for older, obsolete properties in this environment. Second, ground is being broken for about 5,000 rooms each month—quite a bit higher than STR and many other industry observers expected. Those two trends could prolong the bouncing-on-the-bottom period the industry is now experiencing. If supply numbers continue to swell and demand only nominally increases, it’s going to be a long road to recovery for a battered hotel industry.