Several articles appeared this week in publications that we follow as part of our hospitality consulting to advise clients as their management experts suggesting more good and bad news still exists. Of interest this week are that room values and extended-stay lodging have both increased substantially in recent months. However and during the same period, unemployment continues to hover at close to 10%. In one report, the average selling price per hotel room jumped toHotel Room $107,988, an increase of 86% compared to the 2009 year-end total of $58,190 according to Lodging Econometrics. In the other report, the U.S. extended-stay hotel room nights in 2010 were the highest ever recorded in the first nine months of a year with room revenues hitting a record for any third quarter period. However, the damper to this good news is that the unemployment decline stays unchanged according to the latest U.S. Labor Bureau non-farming report. Links to the full articles are available here: US Hotel Transaction Trends Report for 3rd Quarter 2010 Report shows Extended-Stay Roomnights up in 2010 The Employment Situation – October 2010 The combination of these reports is a signal to us as part of our hospitality consulting update that there are still mixed signals going forward in respects to lodging and travel throughout the USA. The take aways are a) hotel income drives room valuations and it is obviously up significantly at least are far as these reported real estate sales transactions are concerned, b) extended-stay rooms command a higher rate and suggest that travelers, especially the corporate market, are in a position economically to spend more for lodging in 2010, and c) continued high unemployment could stymie any further gains in both going into 2011. In essence, recent income gains and uncertainty regarding near term unemployment reductions still creates a pessimistic investment and lending environment from a hospitality consulting perspective.
Perry Group
Hotel & Restaurant Experts For The Hospitality Industry
