Hotel News Resource - PKF Hotel Industry News

Coming out of lodging industry recessions, we have historically observed fairly significant increases in hotel operating expenses. Since the initial revenue recovery is typically driven by occupancy, variable expenses naturally rise with the increased volume of rooms occupied and guests served. In addition, hotel managers desire to reinstate the services and amenities that were discontinued during the downturn contributes to above-average expense growth.

According to a new study released by PKF Consulting USA (PKFC), hotel spas experienced deeper declines in revenues and profits than did hotels, as measured by RevPAR, in 2008 and 2009 and also are taking longer to recover.

In 2009, all segments of the lodging industry struggled. However, the combined impact of the economic recession and the demonizing of corporate meetings, resulted in an even more dramatic fall off in performance for conference centers.

While many hoteliers are feeling angst and uncertainty caused by intimidating macroeconomic conditions, PKF Hospitality Research (PKF-HR) is assertively forecasting the continued recovery of the U.S. lodging industry. How well you do in 2012, however, will vary depending upon the price of your room and where you are located. According to the recently released December 2011 edition of Hotel Horizons®, PKF-HR forecasts that rooms revenue (RevPAR) for U.S. hotels will rise 8.1 percent in 2011, and increase another 6.1 percent in 2012.

PKF Hospitality Investment Survey

After suffering through record-breaking declines in revenues and profits during 2009, it is not surprising that U.S. hoteliers were a bit conservative when preparing their operating budgets for 2010. In the fall of 2009 (when the 2010 budgets were being prepared), hotel owners and operators were anticipating some degree of a turnaround in 2010. How could conditions possible get worse?

Despite news of persistent high levels of unemployment and waning consumer confidence, PKF Hospitality Research (PKF-HR) has increased its forecast of revenue growth for U.S. hotels in 2011. According to the September 2011 edition of Hotel Horizons®, PKF-HR forecasts that rooms revenue (RevPAR) for U.S. hotels will rise 7.2 percent in 2011. This is a more optimistic projection than the 6.9 percent RevPAR growth rate published in the June 2011 edition of Hotel Horizons®.

In 2010, utility costs for the hotels in the Trends® sample averaged $2,251 per available room, or 4.4 percent of total revenue.

After analyzing the results of the 2011 Trends® in the Hotel Industry survey, the relationship between price positioning and profits appears to be as strong as the correlation between room rates and the ability to grow revenue.

On paper, the formula for success at an extended-stay hotel is very sound. By accommodating guests for an extended period of time, these properties are able to ‘cover up’ the soft spots on their calendars and achieve extraordinary annual levels of occupancy. In addition, the combination of limited services and amenities leads to increased employee productivity and high profit margins.