Smith Travel Research late last week in publishing its full-year 2007 U.S. lodging industry results, confirmed its prediction of strong performance through 2008, although its growth forecast was a bit more conservative than other forecasters.
Meanwhile, a report released today by Ernst & Young said overall economic woes could change the equation. Ernst & Young hospitality and leisure practice director Michael Fishbin said in the report that financing difficulties will mean less new construction than expected in the next two or three years, keeping supply in balance with demand. In addition, Ernst & Young said to expect more international investment from U.S. hotel companies, including some companies not currently pursuing that route.
Smith Travel Research said U.S. occupancy dropped slightly in 2007, down 0.2 percent compared with 2006, but average room rates grew by 5.9 percent to $103.64 and revenue per available room was up 5.7 percent. Hotels increased the overall room supply by 1.4 percent.
"We expect another good year in 2008," Smith Travel Research president Mark Lomanno said in a prepared statement. "Room supply growth will likely increase and reach the long-term trend number of just over 2 percent. Demand growth should continue but will likely be lower than supply growth, resulting in declining occupancy."
Despite that decline, Smith Travel Research expects room rate growth to completely drive and increase RevPAR by 4 percent to 4.5 percent. This is below the 5.1 percent increase in RevPAR forecast by PricewaterhouseCoopers at the end of the year
(BTNonline, Jan. 22).