Hotel RevPAR to Peak in 2013

The current economic crisis makes it difficult for hotel revenue managers to think beyond the current year or the next year. However, the Jones Lang LaSalle Hotels have released their forecast that the industry will turnabout completely in the next several years. As if that’s not enough, it is also projected that the revenue per available room or RevPAR will actually increase to its highest levels in 2013. It is estimated to reach as much as $68.28 which is even higher than the previous peak in 2007.

It is undeniable though that the market is about to get worse before it gets better. The same firm also expects RevPAR to regress by 12.1 percent because of the 5.1 percent decline in occupancy and 7.4 percent drop in daily rate. Everything is seen to bottom out by 2010. So it is a good indication that upward momentum is on its way.

As you can see though, growth will not be achieved overnight. In fact, it is expected there will only be a slight growth of 4.7 percent in 2011. Despite all this, it is undeniable that the gradual increase in hotel ADR and increase hotel occupancy will contribute to more hotel transaction and propel the RevPAR growth even further. If you are wondering about the accuracy of this forecast, then it is important to take note that these figures are the result of a comprehensive study of current economic indicators.

Some economic data that were used include gross metro product, gross domestic product, US retail sales, Standard & Poor’s 500 Index, and the customer price index among others. In the past, the indicators have shown dramatic correlation with hotel sales and profit optimization. By studying these statistics and coming up with a comprehensive strategies that will address present issues in the market, hotels will be able to boost profitability.

Another significant aspect that will contribute to the said growth is the fact that investment in new hotel structures is quite limited at this time. The supply pipeline is experiencing attrition because only a limited number of new rooms are not scheduled to be delivered with today’s economy. As a result, the supply does not grow at the rate it should even as the demand picks up as the economy recovers.