Strong revenues, and improved corporate travel and leisure demand are helping to create positive trends overall for the US lodging industry, says Ernst & Young’s 2005 National Lodging Report.
“But one possible lurking danger is volatile gasoline prices,” the report said.
Backing that up was a new poll that found 43.5% of those polled said their summer travel plans will be slowed because of higher prices, according to a study by the Sacred Heart University.
Trends for the lodging industry unveiled by Ernst & Young:
• Hotel average daily room rates are expected to increase 4% this year, to $90.
• RevPAR rates, an industry standard, is expected to climb 6.9% to $57, topping the previous peak set five years ago.
• Supply and demand for lodging are in good relationships with each other to produce hotel operating performances.
• Speculative building for tourist business, however, is more risky than ever. “Assuming that a host of other complementary attributes are present in the immediate geographic area is essential to rationalize and sustain a location as a tourist or convention destination,” the report said.
Other developments in the market include stronger investor sentiment and increased capital market activity.
Annual revenues are also expected to be stronger than for other real estate investments.
Report by David Wilkening
