U.S. hotels expect profits to return in 2010
U.S. hotels should enjoy a 2.3% increase in net operating income in 2010 after a nearly 38% drop in profits over the last three years, according to a forecast released Monday by Colliers PKF Hospitality Research.
The positive forecast -- the first since 2007 -- is the result of a projected 5.2% increase in occupancy rates to 57.5% but a 0.6% decline in average room rates for 2010.
"The likelihood that this trauma is coming to an end is welcome news," said R. Mark Woodworth, president of Atlanta-based Colliers PKF.
Since the recession first hit, occupancy rates and room rates have plummeted as travelers have tightened their grip on spending. The average occupancy rate in U.S. hotels in 2009 was about 55%, the lowest it has been in more than 20 years -- even lower than the average during the travel-wary days after the terrorist attacks of Sept. 11, 2001.
In the report, Woodworth called the increase in profits for 2010 "underwhelming" but predicted even greater profits in 2011 to 2013 as occupancy rates increase.
-- Hugo Martin
Photo: Outside the Hilton Checkers Hotel in Los Angeles. Credit: Los Angeles Times