New US RevPAR forecast signals 2011 upturn

Jones Lang LaSalle has indicated that revenue per available room (RevPAR) is expected to return to growth during 2011, which would represent the first year-over-year RevPAR increase since 2007.

Published: 21 Sep 2009

Jones Lang LaSalle has indicated that revenue per available room (RevPAR) is expected to return to growth during 2011, which would represent the first year-over-year RevPAR increase since 2007.

In its latest RevPAR forecast, a one-of-a-kind, five-year outlook, RevPAR is expected to grow by 7.3 percent during 2011 which approximates the growth rate recorded in 2004 when the industry recovery accelerated. This year’s hotel RevPAR decline in the US likely will be the most drastic, projected at 17.4 percent. In 2010, RevPAR is projected to drop an additional 2.4 percent as demand remains soft and supply is expected to increase by 1.3 percent. The combination of soft demand and increased supply will cause hotel owners to continue to discount rates in an attempt to stimulate demand and build market share, said Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels.

Stalled hotel development will continue to idle supply in 2011 and beyond - will be a key driver of RevPAR growth for that same time period.

“The signs of upward momentum in 2011 may help bridge the gap between next year’s expected low point and a much-needed light at the end of the tunnel for struggling owners and operators,” said Adler.

By 2013, US RevPAR is forecast to reach $66.80, which would exceed the previous peak achieved in 2007 ($65.50). In 2013, US Average Daily Rate (ADR) is expected to be 5 percent higher than the previous peak of 2008 ($106.60).

RevPAR in major US markets is expected to post a return to growth during 2011 with Chicago and Washington, D.C. among the strongest of the cities studied, with expected growth rates of 5.7 percent and 4.6 percent, respectively.

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