STR Hotel Industry Forecast for U.S. 2010

Smith Travel Research in Hendersonville, TN is one of the leading hotel industry data reporters.  Last week the company published its 2010 hotel industry forecast. In the first month of 2010 the company is predicting hotel occupancy will remain flat in 2010 and finish the year at 55.1%. This is after an 8.7% drop in 2009. On average, across the U.S. hotels will go through 2010 just more than half-full.

A consequence of low occupancy is continued lower room rates. STR predicts the average rate of a hotel room will decrease another 3.3% this year to finish 2010 at US$94.39 per night. The average daily rate for U.S. hotel rooms fell over the 2009 year to $97.51, an 8.8% drop . (STR source)

Sure, you will still see $400 per night for many New York City hotels, but you will also see $35 per night rates at some Comfort Inns and Knights Inns around the country. And even those typically $400 a night luxury hotels will likely have rooms in the $200 range in many locations when travelers are not filling $400 per night rooms.

A luxury hotel takes five years or more to go from planning to opening. 2010 will see a large number of luxury hotels opening in the U.S. that looked like solid investments when they were initially planned way back in the boom of 2005. Demand is expected to pick up in 2010, led by the luxury and upper-upscale hotel market and business and leisure travelers. Unfortunately for the hotel industry, demand is expected to increase at the same percentage as new hotel rooms being added in 2010, 1.8% in the U.S.

This looks to be another year of unprecedented luxury hotel bargains. Grab them if you can as these deals may not be so readily available after 2010. 2009 was the most time I have spent in luxury hotels and the cost was less than I have ever landed luxury class hotels in my years of loyalty travel.

2009 was a tough year financially for the hotel industry, particularly in the U.S. The “great recession” of 2009 produced data harking back to the “great depression” of 1929. Mark Lomanno, president of STR, stated, “Good riddance to 2009, a year that we believe will go down as the worst in the modern hotel industry.”