Bruno Perez, an active member of our HSMAI Chapter, and Jean Francois Mourier, recently nominated for our Chapter’s Revenue Management Professional of the year, have written an article on REVPAR GURU’s Hotel Industry Predications for the coming year. Bruno Perez has kindly given me permission to quote from their article. Here are some excerpts:
“...Although we aren’t pessimistic about the future state of the hotel industry, we also don’t believe that the New Year will bring immediate relief. There is no miracle cure; hotels and resorts will likely grapple with depressed demand, lower rates, and anemic revPAR and occupancy figures for some time to come....
Less is sometimes… less -- Despite the recovery, hoteliers should be prepared to do more with less this coming year. Guests are likely to be stubbornly slow to return, at least not at the same rate enjoyed by the industry following the early-00’s recession. …
….working capital (both operational cash flow and from borrowing activity) will be constrained…. Hotels and resorts will have to optimize what they already have in 2010; in terms of guests, this means putting a premium on incremental revenue derived from existing clientele; in terms of capital and infrastructure, it means maximizing revenue per existing square foot….
Auto, Automate, Automation --The staffing situation will highlight the importance of automation in key hotel systems….. Automation is a winning strategy for 2010.
RevPAR Resurgence -- 2009 was the year of salvaging occupancy, a trend best embodied by substantial discounts and rate cuts by the major chains. In 2010, as occupancy slowly picks back up …the emphasis will be more on revPAR, than lose-lose price wars. This follows the logic of doing more with less; the demand in the 2010 market will be such that artificial occupancy optimization measures (like deep discounting) will be unsustainable, making revPAR the metric that matters
Building for a Recovery -- Hotels should get back to making what investments they can in revenue-generating initiatives in the New Year. ….For many hotels… the recession-created lull in occupancy created an opportunity for development for the future. Look for this trend to continue into next year.
Supply Pipeline -- Lodging supply actually grew in the third quarter of 2009 ... While this indicates a trend upward, there is not likely to be a substantial upsurge in new hotel construction as 2010 opens…..and it is doubtful that 2010 will see a sudden influx of new hotels (the availability of financing for new construction is unlikely to improve until the latter half of 2010 at best, further limiting inventory increases in many markets).
ADR -- RisingUS average daily rates are, as might be expected from the published occupancy and revPAR predictions, forecast to increase slightly in 2010. Business travel, hit particularly hard by the recession, is poised to make a comeback in 2010, though probably not to 2007 levels. This, coupled with hotels’ decreasing reliance on deep discounting to boost occupancy, will lead to higher average daily rates. Higher ADRs, along with occupancy optimization through effective revenue management, will in turn lead to improved revPAR and a recovery for the industry as a whole….
As with all forecasts, our predictions for 2010 may be end up being different to reality. There is still so much uncertainly pervading the global marketplace, and the lodging industry is no exception. We may yet enter a double-dip recession, or the so-called jobless recovery may prove too tenuous to support many hotels. We maintain, however, that the New Year will be dominated by revenue management optimization, a return to healthier occupancy and revPAR levels, and weak but not nonexistent demand.
More than anything, we think that innovative properties and chains will eke out a considerable competitive advantage over their lagging peers. There are always opportunities, after all. In 2010, the key will be seizing them when they present themselves.”
To contact the writers, Bruno Perez and Jean Francois Mourier of REVPAR GURU for additional commentary or to receive the entire (uncut) article, please contact Vanessa Horwell at jrodrigues@thinkinkpr.com or 305.749.5342 x 234. Best, Julie Wernick, HSMAInsider.
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