H otel Industry forecast: Expect worse before it gets better The latest forecasts for the lodging sector indicate the industry will continue to struggle into the second and third quarter of 2009, with a projected 3.5-percent year-over-year decline in occupancy to 59.1 percent-the lowest level since 2003. In other words, look for things to get tougher before they get better. Adding to the bad news is the expected leveling of international travel as the economic crisis expands globally, which could decrease the number of visitors to gateway cities, where international travel remained strong through 2008. The downturn will continue to expand into the business market in 2009 much more prominently than it did in 2008. The economy hit leisure travelers first-now the expectation is for business travel to be adversely affected by economic conditions. This is especially worrisome because the top 15 markets (where most business travelers are going) make up around 34 percent of industry revenue. Amid the bad news is one ray of hope for 2009: An expected 1-percent year-over-year increase in average daily rate to an all-time industry best of $108.52. When it comes to ADR, the difference between this downturn and previous downturns is hotel operators are less inclined to discount rates-they have learned that holding rate is important for their business in both the short and long term. We expect ADR growth to remain in positive territory for the next three years and beyond. And while the supply of hotel rooms is expected to increase by 2.4 percent in 2009 over 2008, expectations are for a 1-percent decrease in demand. The bulk of those new hotels are developments that have been underway for the past two or three years; as 2009 progresses and these new hotels open, the forecast is for fewer additional hotel rooms to come online due to the continued tightening of the financial markets. We'll be seeing the largest new supply of rooms in two very specific market segments: upscale and midscale-without-food-and-beverage properties, which continue to offer a good price point for leisure and business travelers. Although we expect a modest 0.4-percent increase in revenue per available room through September from year-end 2007 to $65.75, the expectation is that RevPAR will experience a 2.5-percent year-over-year decline in 2009 to $64.10. There is good news on the horizon for 2010. Projections include: " 0.6-percent year-over-year decline in occupancy to 58.7 percent; " 2.1-percent year-over-year increase in ADR to $110.80; " 1.5-percent year-over-year increase in RevPAR to $65.06; and " 1.2-percent increase in supply and a 0.6-percent increase in demand. Finally, the hotel industry previously has been able to overcome downturns. It has learned how to better manage through financial adversity (maintaining ADR, for instance) and that it must continue focusing on best practices and customer service to make sure it emerges successfully on the other side of this downturn. **picture property of www.spiegel.de**

(by:Ahmad Jayadi,General Manager Wingate by Wyndham Hotel and Resort, WY, USA C.H.A 808 AVOCA AVE LOT 17 SHERIDAN, WY, 82801, USA Direct Line: + 1-307-752-9447 and 307-673-0504 Email: ahmadjayadi@yahoo.com

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