Hotel boom may be a bust, except for you

A change is looming in the U.S. hotel industry that may work to the advantage of bargain-seeking travelers.

A new study by PKF Hospitality Research says demand for hotel rooms will contract for the next two years. Couple that with the forecast of a combined net increase in 2008 and 2009 of nearly 275,000 new hotel rooms compared to year-end 2007 should lead to lower occupancy rates and an improvement in rates and special packages to make up for that.

Reports by Smith Travel Research show three consecutive years of fewer accommodated room nights for the average U.S. hotel.

"Because of the extended slowdown of the U.S. economy, compounded by the negative consequences stemming from airline capacity cutbacks, we are now forecasting a 0.2% decline in lodging demand in 2008, followed by another loss of 1.1% in 2009," said Mark Woodworth, president of PKF Hospitality Research. "According to data from Smith Travel Research, this is the first time since 1988 that the U.S. lodging industry will experience two consecutive years of decline in lodging demand.

"With supply and demand moving in opposite directions, the typical hotel manager will not be able to maintain their aggressive approach to raising room rates," Woodworth said.

Occupancy at U.S. hotels continued to fall in the first week of September although room rates remained steady, according to Smith Travel Research. That means occupancy dropped 7.3% year-over-year to 54.3%. The industry's average daily rate grew 1.2% to $100.73.
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