The hotel industry is suffering through the economic downturn just as the airlines are, but the weeping and wailing coming from hoteliers is nowhere as shrill as that heard from the airlines. Perhaps it should be. The Smith Travel Research hotel data doesn’t show any sort of recovery in the hotel sector.
Last week, I was at a major conference in Orlando. The dichotomy of a luxury hotel half-filled with hundreds of visitors paying $200-a-night conference while at the same time offering walk-up visitors $129 rates was unprecedented in my experience.
After opting out of the $200-a-night rates prior to the conference, I ended up staying at a Quality Inn one exit down the Interstate. It was the same hotel I used two years ago. Back in 2007 the rate was $64 a night. This year, I made day-by-day last-minute bookings for $32 a night. Amazing.
Clearly, hotels are suffering in Orlando. These hotels surrounding the Magic Kingdom in Central Florida are not alone. Smith Travel Research released their latest hotel performance data and the nation overall is facing a falling hotel market in terms of occupancy and average daily rates.
In year-over-year measurements, the industry’s occupancy fell 2.8 percent to end the week at 52.7 percent. Average daily rate dropped 7.6 percent to finish the week at US$95.85. Revenue per available room for the week decreased 10.1 percent to finish at US$50.55.
It is not a pretty picture. Houston and Nashville reported the largest decreases in occupancy rates in this latest report. Both have occupancy rates in the mid-50 percent range. This is not healthy.
The average daily rates (ADR) in Atlanta, Boston and Phoenix all dropped more than 15 percent in mid-November.
Bright spots are New Orleans where occupancy is rising and average daily rates are going up as well. San Francisco and Norfolk-Virginia Beach also saw increases in ADR. But, New Orleans is still rebuilding from Katrina and Norfolk-Virginia Beach revenues are still near $35 a night lows.
With the poor economy not showing signs of improving and the international economy reeling from the latest Dubai credit shock, the hotel industry will find itself right in the middle of that latest crisis. Dubai investments include major hotel portfolios that may have to go at fire-sale prices to shore up that country’s balance sheets.
