The good news is that when faced with lower levels of business in 2008, US hotel managers cut operating costs by 0.3 percent. Unfortunately, total hotel revenues dropped 1.3 percent, resulting in a 3.8 percent decline in net operating income for the average US hotel, according to findings released today by PKF Hospitality Research (PKF-HR) in its 2009 edition of Trends(R) in the Hotel Industry. Given the depth and breadth of the continuing economic downturn, further expense cuts will not be enough to offset the anticipated declines in revenue in 2009.
"Forecasts of a double-digit decline in rooms revenue per available room (RevPAR) during 2009 are troubling enough. However, for the lenders, owners, and managers of US hotels, the real concern is the impact on profitability," said R. Mark Woodworth, president of PKF-HR. "While the fall-off in lodging performance was not as great last year as it will be in 2009, an analysis of the 2008 data could prove instructive as a guide to how US hotel managers will react this year as business levels continue to deteriorate."
Each year, PKF-HR collects financial statements from thousands of hotel owners and operators across the US for its annual Trends(R) in the Hotel Industry report. The 2009 Trends(R) report marks the 73rd edition of this publication and provides industry benchmarks for 2008 unit-level revenues, expenses, and profits. For the purpose of this analysis, net operating income (NOI) is defined as income before deductions for capital reserves, rent, interest, income taxes, depreciation, and amortization.
Revenues in 2008
Total revenue for the average property that participated in the 2009 Trends(R) survey declined 1.3 percent from 2007 to 2008. The main driver for the decline in revenues was the 1.8 percent drop off in average daily rate (ADR). Not only did rooms revenue decline 1.0 percent, but food and beverage revenue fell off 3.0 percent as well.
"Not all property types in the Trends(R) survey reported declines in revenue in 2008," Woodworth said. "Total sales at both limited-service and convention hotels increased slightly during the year." Resort hotels suffered the greatest decline in revenue (-4.6 percent) because of a 5.1 percent drop in occupancy, as well as declines in both food and beverage and other operated department revenues.
The good news is that when faced with lower levels of business in 2008, US hotel managers cut operating costs by 0.3 percent. Unfortunately, total hotel revenues dropped 1.3 percent, resulting in a 3.8 percent decline in net operating income for the average US hotel, according to findings released today by PKF Hospitality Research (PKF-HR) in its 2009 edition of Trends(R) in the Hotel Industry. Given the depth and breadth of the continuing economic downturn, further expense cuts will not be enough to offset the anticipated declines in revenue in 2009."Forecasts of a double-digit decline in rooms revenue per available room (RevPAR) during 2009 are troubling enough. However, for the lenders, owners, and managers of US hotels, the real concern is the impact on profitability," said R. Mark Woodworth, president of PKF-HR. "While the fall-off in lodging performance was not as great last year as it will be in 2009, an analysis of the 2008 data could prove instructive as a guide to how US hotel managers will react this year as business levels continue to deteriorate."Each year, PKF-HR collects financial statements from thousands of hotel owners and operators across the US for its annual Trends(R) in the Hotel Industry report. The 2009 Trends(R) report marks the 73rd edition of this publication and provides industry benchmarks for 2008 unit-level revenues, expenses, and profits. For the purpose of this analysis, net operating income (NOI) is defined as income before deductions for capital reserves, rent, interest, income taxes, depreciation, and amortization.
Revenues in 2008
Total revenue for the average property that participated in the 2009 Trends(R) survey declined 1.3 percent from 2007 to 2008. The main driver for the decline in revenues was the 1.8 percent drop off in average daily rate (ADR). Not only did rooms revenue decline 1.0 percent, but food and beverage revenue fell off 3.0 percent as well.
"Not all property types in the Trends(R) survey reported declines in revenue in 2008," Woodworth said. "Total sales at both limited-service and convention hotels increased slightly during the year." Resort hotels suffered the greatest decline in revenue (-4.6 percent) because of a 5.1 percent drop in occupancy, as well as declines in both food and beverage and other operated department revenues.
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