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Hotel Rates Forecast to Drop

PKF Hospitality Research announced that nine consecutive quarters of declining lodging demand will come to an end in the second quarter of 2010, but that rates will drop.

“With the budgeting process underway at hotels around the U.S., the recovery of lodging demand is an important milestone that will be reached in the year ahead,” said R. Mark Woodworth, president of PKF Hospitality Research. “The catch; however, is that the practice of price discounting has firmly taken hold, and, as a result, room rates are expected to decline once again in 2010.”

“Higher-priced hotels have suffered the greatest erosion in pricing power during this protracted contraction and, as a result, offer an abnormally strong value proposition as the industry begins to turn the corner mid-way through 2010,” Woodworth noted.