New, Gloomier Hotels Forecast Sites Need For Group Recovery

Travel industry watchdog Smith Travel Research issued its latest predictions for the U.S. hotel industry this year, and the news isn't good -- but not all bad, either. STR projects an even steeper drop in average daily rates and other metrics than previously forecast. Now, the company says rates will fall 9.7 percent in 2009 (almost three times its April prediction), and revenue per available room will be down 17.1 percent year-over-year (almost double its forecast from April). [more]

But while the news was largely negative, there was a positive recognition that a rebound of group travel will be the key to the lodging industry's recovery, according to a story in Business Travel News. STR president Mark Lomanno estimated that group business will have to return to about 90 percent to 95 percent of its levels prior to the downturn, which will in turn create transient demand, before hotels once again gain any pricing leverage.

The story said drops in all three metrics will continue in 2010.

In these times of heightened cost oversight, the luxury resorts of Hawaii are being hit particularly hard. A recent story in Pacific Business News cited statistics showing a May occupancy rate-drop of 6.5 percent, to 61.9 percent -- Hawaii's lowest since 1987. The story said June average daily rates in the state fell nearly 13 percent, to $165.

Obviously, numbers like these are a negative for the industry...but, as I've said here, before...a buying opportunity for companies and associations. I encourage meeting managers with events on the horizon to use this information to actively seek bargain rates via Request for Proposals (RFPs) and, if possible, reapproach hotels to renegotiate existing agreements.

You can read up on ways companies are re-approaching hotels and re-using canceled meeting space by clicking here!

Kevin Iwamoto is vice president of enterprise strategy at StarCite. This post is syndicated from his blog, Strategic Meetings Management.