If you invested in hotels, now’s the time where you may need to hang on and ride the slow times, according to PKF Consulting trends forecast of 2009-2010. Already seeing a decline over last year’s hotel occupancy rates, the hospitality research firm is tracking the numbers and the news isn’t so great. According the California-based company, you may have to wait till the latter part of 2010 to see your investment turn around, or pick up speed, at minimum. A 7.8 percent drop in RevPAR for 2009 is the 5th biggest annual decline since 1930.
Some highlights of the report include: 1. The speed and severity of the downturns in employment and income continue to accelerate. 2. A 2.5 percent recduction in occupancy of hotel rooms in 2009. 3. The combination of above average net increases of supply occurring simultaneously with dramatic declines in demand is something that has not occurred in recent industry recessions. This is what makes this downturn so severe. If there is such a low demand for hotel rooms, why aren’t we seeing major cuts in pricing? The answers lie somewhere in the desire for hotels to maintain the profit margin, hoping not to further erode earnings with deep discounts. Sometimes that works, and sometimes the prices go down more just to keep staff employed and traffic in and out of the business.