By Mark Heschmeyer
June 2, 2010

Email Print U.S. hotels should enjoy revenue growth the rest of this year, but it probably won’t translate to the bottom line until next year, according to new lodging industry reports released this past week.

According to Smith Travel Research (STR), lodging demand in the first quarter of 2010 increased 5.3% compared with the first quarter of 2009. This is the largest quarterly increase in hotel demand since the second quarter of 1989.

Hotel transaction activity also appears to be thawing, although it still remains a fraction of what it was a couple of years ago, according to Jeff Myers, a real estate economist with CoStar Group, Inc. Through the first four months of the year, hotel sales volume was on pace to surpass 2009′s total, and its proportion of overall commercial real estate investment activity has spiked.

Revenue Ready To Rise; Profits Not Quite
Revenue per available room (RevPAR) could grow 1.7% this year but NOIs could contract another 1.4%, according to the May 2010 edition of PKF Hospitality Research’s Hotel Horizons.

“We believe the first-quarter surge in occupied rooms foretells the start of a strong comeback in the demand for lodging accommodations,” said R. Mark Woodworth, president of PKF-HR. “As early as September of 2008, we anticipated the inflection point for hotel demand to occur in the first quarter of 2010, but quite frankly, the magnitude of the turnaround was a very pleasant surprise. Such a large increase in lodging demand suggests a return of pent-up travel that did not occur in 2009 because of budget constraints, plus the real hotel demand growth attributable to improvements in the long-term economic outlook.”

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