We first highlighted addressing a down market last fall. The study (highlighted below) from PKF Hospitality Research continues to confirm.
Now, reality has hit. But, with the perception being the market is going to be slow for awhile, we anticipate consumers will be back to traveling. Time will be more important and value will be critical as they make fewer trips. But, don’t mistake value for discounting. Low rates will abound. Will more complete experiences?
We are suggesting less overall marketing dollars be spent toward new guest acquisition and more focus aligned on bringing back past guests – and their friends. They already have an understanding of the value your property offers.
PKF Hospitality Research published a study Monday that predicts hotel loan defaults, bankruptcies and foreclosures will rise in 2009, bringing one of the worst years on record for the hotel industry.
PKF Hospitality Research found the number of full service U.S. hotels that don’t have the cash flow needed to pay their debt will jump 25 percent in 2009, and property values will likely decrease another 20.1 percent. This follows a 14.1 percent decline in property values in 2008.
The firm also projects the average U.S. hotel will face a 9.8 percent drop in revenue from the rental of guest rooms (RevPAR), a key financial measure for the industry. RevPAR dipped 1.8 percent in 2008.
“The drop in RevPAR for 2009 will be the fourth-largest annual decline in this important measure since 1930,” said R. Mark Woodworth, president of PKF-HR, in a news release. “Further, PKF-HR is forecasting that the nation’s hotels will not experience a year-over-year quarterly increase in RevPAR until the third quarter of 2010.”
The projected eight consecutive quarters of declining RevPAR, beginning with the third-quarter 2008 decline of 1.1, marks the longest stretch of falling revenues endured by U.S. hotels since the firm began tracking performance data more than 20 years ago.