Hotel Occupancy Predicted to Increase 5% Over Next Year

USA Today: Travelers in the coming year should prepare to pay higher rates and compete for the best rooms, a new analysis of future hotel bookings suggests.

Occupancy nationwide is expected to increase by about 5% and rates by about 4%, according to industry tracker TravelClick's analysis of North American hotel bookings for the 12 months ending Sept. 30, 2012.

"While there is much uncertainty regarding where the overall economy is headed, hotel industry performance over the remainder of 2011 and heading into 2012 continues to look strong," said Tim Hart, a TravelClick executive vice president.

The gains should please hotel owners, who endured steep drops in occupancy and room rates in the recession. Revenue per available room, the industry's key financial measure, is expected to increase by almost 7%, the analysis says.

The recovery will not be across-the-board. Five markets in the next 12 months are expected to see hotel occupancy sink, with Minneapolis-St. Paul (-9%) and Denver (-8%) predicted to fare the worst.

On the other end of the spectrum, a handful are projected to see occupancy gains of 15% or more.

Charlotte is expected to experience a 20% increase in occupancy, followed by 15% gains in Houston, Seattle and Philadelphia, which will mean renewed competition for rooms and perhaps a wait in the check-in line.

It's Detroit, however, that TravelClick predicts will emerge the biggest winner during this period, with an expected 22% increase in occupancy.

"We're well ahead of the curve from a national improvement standpoint," says Thomas Conran, principal of Greenwood Hospitality Group, owner of The Henry hotel in Dearborn, Mich., a Detroit suburb.

Reflecting Detroit's economy, the Henry had previously been a luxury Ritz-Carlton hotel where the auto industry frequently met and had functions, but Conran's group repositioned it last year. Out were the dark-wood-covered walls that gave the hotel its clubby atmosphere. In were a lighter color palette, a vibrant restaurant, reduced room rates and marketing by Marriott's "anti-chain" Autograph Collection. On busy mid-week nights, a guest might today pay about $200 a night — less than during the auto industry's heyday.

But what the Henry lost in rate, it's starting to make up with volume. "There's an energy that this hotel has not seen for many, many years," says Conran.

Conran credits Detroit's recent recovery to the state's efforts to lure more leisure travelers via its website, as well as the success of Detroit's resurgent sports teams, which has helped lure weekend visitors.

Finally, Conran says, the Detroit area is seeing "significant" year-over-year gains in business travel thanks to the recovering auto industry.

"We can't underestimate the fact that the health of the auto industry has improved dramatically," Conran says.


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