Corporate Housing Providers Shed Inventory

Corporate housing inventory dropped by 5.7 percent in 2008 while rates increased slightly but behind the rest of the lodging industry, according to the 2009 Corporate Housing Industry Report, a joint effort of The Highland Group and the Corporate Housing Providers Association.

Inventory growth areas for the industry segment included Washington, D.C., where it increased 9.4 percent; Los Angeles and St. Louis, which both had increases of about 8 percent; Houston, where inventory increased 7.1 percent; and Boston, which saw a 6.6 percent increase. Austin, Texas; Columbus and Cleveland, Ohio; and Nashville saw some of the largest inventory drops in 2008.

The report estimated 2008 corporate housing inventory to be 73,385 units on a daily average, down from 77,799 units in 2007. Early estimates for this year suggest it will decline 2.9 percent to 71,257 units, though the volatile economy could significantly change that by year-end, according to the report.

The 2008 corporate housing average daily rate increased to $117, up 1.2 percent from 2007 levels. That's behind the 2.4 percent growth rate reported by Smith Travel Research for the lodging industry and the 3.7 percent rate for the extended stay tiers. Many corporate housing providers expect business to remain flat or decline this year, and several are preparing to cut expenses, but few expect to cut rates, according to the report.

Occupancy in 2008 dropped slightly to 88.5 percent, compared with 89.7 percent in 2007, the report indicated. Corporate housing occupancy generally remains high because operators can remove units in accordance with demand.

Housekeeping fees increased slightly in 2008, with the largest increase reported for three-bedroom units. One-time ancillary charges, however, are becoming less common in corporate housing, particularly Internet fees, which the report described as rare.

In Canada, which does not have as much extended stay hotel penetration as the United States, the report indicated that average daily rates for Calgary, Toronto and Vancouver were within the range of the larger U.S. markets. Downtown Toronto rates were the highest, at 128 Canadian dollars, followed by Vancouver, where the average rate was C$126, and Calgary, where the average rate was C$105. Toronto occupancy also was the highest, at 87 percent.