Smith Travel Research now projects that average daily rate will drop by 9.7 percent in 2009, and revenue per available room will be down 17.1 percent year-over-year. In April, the firm had forecast a RevPAR drop of 9.8 percent and a rate drop of 3.6 percent (BTNonline, April 28). STR also said occupancy will drop 8.4 percent to 55.4 percent this year, slightly down from the rate of 56.5 percent it forecast in April.

In 2010, drops in all three metrics will continue, STR said. It forecasts that rates will drop 3.4 percent, occupancy will drop by 0.3 percent and RevPAR will be down 3.7 percent.

A rebound of group travel will be the key to the lodging industry's recovery, said Smith Travel Research president Mark Lomanno. Group business will have to return to about 90 percent to 95 percent of its levels prior to the downturn, which will in turn generate transient demand, before hotels once again gain any pricing leverage, he said.

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