Study Shows Declines In U.S. Corporate Housing Inventory

Corporate housing inventory dropped by 5.7 percent in 2008 and is forecast to continue in that direction this year 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.

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

The report estimated the corporate housing inventory for 2008 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 the end of the year, 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 for the year and the 3.7 percent growth rate for the extended stay tiers. Though many corporate housing providers expect business to remain flat or decline this year, with several preparing to cut expenses, few expect to cut rates in the face of the economy, 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 are able to remove units in accordance with demand.