The March 2010 edition of PKF Hospitality Research’s (PKF-HR) Hotel Horizons® report predicts hotels in the U.S. will suffer a 1.1 percent decline in RevPAR for 2010, which will translate into an estimated 5.3 percent drop in net operating income (NOI) for the year. This will represent the third consecutive year of decreases in these two important performance measures. While the annual forecasts are disappointing, a closer look at the quarterly movements of these indicators throughout 2010 reveals that U.S. lodging industry demand, occupancy, average daily rate (ADR), and rooms revenue per available room (RevPAR) will all start to show year-over-year quarterly gains sometime during the year.
Given the turn towards favorable market conditions that is expected to occur during 2010, an opportunity will exist for some U.S. hotels to improve their performance and achieve growth in NOI. To identify potential tactics managers can implement to take advantage of the improving operating environment, PKF-HR has examined the financial performance of hotels that achieved a gain in profits (NOI) during 2003. The year 2003 was chosen because, like 2010, this historical period represented that last of year of a three year (2001 – 2003) industry recession. The data that was analyzed comes from PKF-HR’s proprietary Trends® in the Hotel Industry database of revenues, expenses, and profits from 6,000 hotel operating statements.
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