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US hotel performance: Time for a baseline reset?

November 16, 2009 | Hospitality Industry

While some travel industry pundits and hotel brands describe seeing “a light at the end of the tunnel,” fall 2009 US hotel performance statistics are not feeling the love. All indications from the major hospitality industry consulting groups suggest that it will take a considerable amount of time for the US hotel industry to recover 2007 performance levels.

Based on the industry performance statistics available, looking at a 12-month moving average, Robert Cole from RockCheetah sees occupancies bottoming out in mid-2010, with average rates trailing by 6 months. Hoteliers will need to wait until 2011 to see RevPAR beginning to trend upward again. Not to be overly pessimistic, but it looks like a decade may pass before inflation adjusted hotel rates return to the levels experienced in 2007.

As a result, the US hospitality industry will need to adapt to the “new normal.” With continuing pressure on business and group travel expenses, more value oriented leisure travelers, and properties fatigued from deferred capital spending and stripped-down operating budgets, relying on traditional operating and service delivery processes creates a recipe for disaster. There is no better (or more needed) time for innovation.

While the challenges may be formidable, hoteliers will be best positioned to succeed during a recovery if they:

- maintain strategic focus
- listen to and engage their customers
- run efficient operations
- demonstrate restraint when faced with potentially illogical or disruptive competitive actions

Having a patient owner, a strong balance sheet and positive cash flow wouldn’t hurt either.

Get the full story at Robert Cole’s RockCheetah blog

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