After what has only been a few years but has seemed like a lifetime, it is finally starting to look like the American economy is slowing starting to recover. Jobs are being created, businesses are starting to report small gains, and industries are looking to the future with hopes of seeing a consumer base who is less afraid of spending money.
Among the recovering industries is the hospitality industry. People are starting to travel again and hotel management companies are breathing a cautious sigh of relief. Now, hospitality management companies are asking the question "How quickly will the industry recover?"
The three main companies who keep track of the hospitality industry are STR, PwC and PKF. All three of these companies agree that the owners and workers of any hopitality management company can look forward to an increase in business, but what the three companies disagree on is exactly how much. PKF says that RevPAR, or revenue per available room, will rise by 6.9% this year. PwC gives an even higher estimate, stating that RevPAR will increase by 7.6%, while STR makes an even bolder claim, stating that RevPAR will see an increase as high as 8% this year.
Of course this is excellent news for the industry. Hotel management companies can expect to see more and more people coming into their hotels and therefore can expect more of a profit. The only downside for owners are that the average rates for rooms have seen little to no increase. This is mainly because many hotel management companies signed low-rate, customer-attractive contracts during the downturn. This was necessary over the past few years in order to stay competitive and to still draw in more customers. However, now that the economy is turning around, hotels will be forced to keep their rates lower until these contracts expire and can be renegotiated.
Although rates will be a little lower than what is hoped for, there is no reason for a hopitality management company to fret; there is even more good news. According to STR’s Senior Vice President Jan Freitag, more transient rooms will be sold in 2011 than in 2007, which is widely considered to be the pre-recession high mark figure. The demand for group rates is also nearly back to the 2007 levels as well. With these numbers on the rise, hotels everywhere can breath just a small sigh of relief, and look to a hopefully bright financial future. [top]