The top three hospitality data research firms have changed their tune in the past six months, each now predicting positive year-over-year growth for revenue per available room by the end of 2010.

Smith Travel Research, PKF-HR and Jones Lang LaSalle Hotels each presented updated forecasts during the ALIS Summer Update at the J.W. Marriott L.A. Live on Tuesday. The overall sentiment was that a real recovery is underway, with demand leading the charge.

“In the higher end of the market, demand is back to where it was before 2007,” said Mark Lomanno, president of Smith Travel Research. “Not quite in the lower end.”

Read the whole article here.

Wild swings in the economy effect hotels in Occupancy, ADR and RevPar and in most cases affect the ultimate value of your asset. One of the burning questions in estimating a hotels value is separating the real estate from the business factor of your asset. We at Hospitality Realty Associates suggest you read the article by Dr. John O’Neill, one of the foremost experts on hospitality valuation. The article assists owners, lenders or analysts in determining a swift and inexpensive method to estimate value using an Automated Valuation Model. (AVM)
Hotel Automated Valuation Model (AVM) Article.pdf

2009 was the most devastating year in recent history with plunging average daily rates (ADR) and revenue per occupied room (RevPar). Even the extended stay market, which always fared well during a typical down turn was adversely affected. The tumbling housing market started the negative spin, tightening the credit markets and forcing corporation to rethink their travel budgets. The traditional Monday through Thursday business traveler would be the first segment to impact the industry. Rates plummeted because on-line travel agencies (OTA’s) began seeing 4 star quality full service hotels starting to compete with limited service hotels for their customers. This was not necessary in the past because of the strong meeting and convention business that these products enjoyed.

This phenomenon is vastly different from 911 or even the events that lead up to the downturn in 1989-1990. In that era we were faced with savings and loan failures, the Desert Storm War and the fact that the 1986 tax law finally came into effect. In that period, credit markets were affected but not paralyzed. The new tax law did not promote new construction of commercial real estate, so in that case it was more of a choice by developers to curtail construction rather than a necessity.

Seize the Opportunity

Just as in 1989-90, where the smart investor seized the moment and bought up huge amounts of assets from FDIC, Government agencies and Lending institutions at bargain basement prices and weathered the storm, you can too. Those visionaries are multi-millionaires today.
Hospitality Realty Associates, a Tampa Bay Based privately-held real estate firm, specializes in buying and selling hotels for our clients, among numerous other services related the hospitality industry. For more information contact Ms. Shannon Larson at slarson@hospra.com or call (727) 867-9398. www.hospra.com.