Hotel Bust
Posted by Jeff Pruitt - 12/10/08 @ 5:27 pm - Filed Under Local Politics
Still waiting for the construction to start on the downtown Courtyard by Marriott? Don’t hold your breath; Calculated Risk links to two separate reports quantifying the pending collapse of the lodging market:
U.S. hotels have entered the initial stages of one of the deepest and longest recessions in the history of the domestic lodging industry according to a new report issued today by PKF Hospitality Research (PKF-HR). The 7.8 percent drop in RevPAR that the hospitality research firm is now forecasting for 2009 will be the fifth largest annual decline in this important measure since 1930.
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According to the PwC forecast, 2008 RevPAR will decrease by 0.8 percent, primarily due to a 3.7 percent decrease in occupancy, the highest annual decrease in occupancy since 2001. In 2009, demand is forecast to decrease by 2.0 percent, which, when coupled with a 1.6 percent increase in supply, is expected to further reduce occupancy to 58.6 percent, the lowest since 1971.
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“The deteriorating outlook for the economy is impacting travel habits and spending, and hotels are expected to experience reduced occupancy levels, and to a lesser degree, some room rate erosion through 2009,” said Scott Berman, principal and U.S. Leader of PricewaterhouseCoopers’ Hospitality and Leisure practice.
Translation: Occupancy rates are going to fall off a cliff and investment in new lodging will do the same. The only question is whether or not our downtown project will survive…
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2 Responses to “Hotel Bust”
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Jeff - It really doesn’t matter - WE PROMISED A 16% profit for 20 years!!!! That’s better than ANY possible investment that is legally available. You don’t think that billionare White would turn down a sure 16% profit, do you???
John,
That only goes up to $250k/year. If they lose more than that then it’s on them…