The U.S. lodging industry this year will spend less on
renovations and amenities than it did in 2009, and industry capital expenditure
levels are nearly half of where they were in 2008, according to analysis
released this week by NYU Tisch Center divisional dean Bjorn Hanson.
Hanson forecasts that capital expenditures levels will be $3
billion this year, more than 9 percent lower than the $3.3 billion spent in
2009 and 45 percent lower than the record $5.5 billion spent in 2008. Despite
recent upticks in demand, Hanson said occupancy will remain below 60 percent
this year—which has happened in only four periods in the past 80 years—meaning
hotels will have less of a profit margin to spend on room improvements.
"In periods of declining industry performance, many
discretionary projects, and even some items that might be noticeable to guests,
are cancelled or postponed," according to Hanson. "Also,
unique to this cycle is that many brands and management companies are waiving
some existing and new requirements for capital expenditures to assist owners in
this period of decreased performance."
In addition, Hanson said many hoteliers already have
completed large-scale projects begun within the past five years, such as adding
new bedding, flat-screen televisions, better breakfast areas and new lobby
designs. From 2005 through 2008, the industry spent more than $20 billion on such
projects.
2009 had marked the first time year-over-year capital
expenditures had decreased since 2003, according to Hanson.