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Occupancy strong, ADR still catching up

November 15, 2011 | Hotel Marketing

What does the hotel industry look like now and how is it shaping up for 2012? These were two of the questions that a panel of lodging industry data-collection agencies were tasked with answering - or, rather, prognosticating on - during a session at the International Hotel, Motel & Restaurant Show in New York City.

While the hotel industry is assuredly in rebound mode, with occupancies back nearly to peak levels, average daily rate has failed to keep stride. "Our industry is breaking records on rooms sold," said Vail Brown, vice president, global sales and marketing, Smith Travel Research, adding that since STR began collecting data, the first three quarters of 2011 saw the most combined rooms ever sold. "However, it will probably be two years before ADR is fully back."

Brown added that the slow growth in new supply was also an impetus for the strong demand recovery.

Post-recession, it was no surprise that the top five U.S. cities (New York, Boston, Miami, San Francisco, Los Angeles) recovered first. STR said that occupancy rate only declined to 68 percent in those destinations as a whole. During the recessions, Brown said ADR was down $150 in those markets, but they are now driving rate recovery. "New York is showing strong rate growth since the beginning of the year," Brown said, adding that discounting in 2010 killed profits, which were a staggering $10 billlion off peak.

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