Although the outlook for the U.S. lodging industry continues to improve, it is favoring upscale hotels far more than those in lower-priced categories, according to a recent report from PKF Consulting.
PKF forecasts that U.S. hotels in the main should achieve a 7.1 percent increase in rooms revenue (RevPAR) in 2011. This is greater than the 5.6 percent RevPAR growth rate projected by PKF-HR in December 2010.
“In 2011, projections of rising employment and income should result in a solid 4.0 percent increase in the demand for lodging accommodations,” said R. Mark Woodworth, president of PKF-HR. “The improved business environment, combined with the 2.0 percent reduction in the payroll tax, will put more people on the road for both personal and professional travel.”
Woodworth noted that, while the industry recovery is expected to continue gaining momentum this year based on improving fundamentals, some segments are rebounding more quickly than others.
“In general, the upper-tier hotels cater to guests that are benefiting the most from the improved economy,” he said. “Therefore, these properties are seeing increases in occupancy which yields greater pricing power. As a result, these managers will have a greater ability to raise their room rates this year. Conversely, the mid-market and lower-tier hotels will continue to lag in RevPAR growth despite offering the lowest rates and greatest discounts.”
According to PKF, luxury and upper-upscale segments are forecast to achieve RevPAR increases of 9.6 percent and 7.1 percent, respectively. Among the chain-scale segments with the lowest rates, RevPAR is projected to increase by 6.4 percent for economy hotels and just 5.3 percent at midscale with food and beverage properties.
