Hoteliers, it might be time to plan a celebration. According to new data, it looks like 2014 will be a year of profit growth.
Atlanta-based PKF Hospitality Research recently released a new report that estimates U.S. hotels will see a 7.7 percent increase in revenue per available room next year. Think that sounds promising? Then, you’ll also enjoy the estimated 15.4 percent increase in net operating income.
While hotel managers and meeting planners alike have dealt with the challenges of federal budget cuts and smaller expense accounts for business travelers, the forecast predicts that those factors will be in the rearview soon.
“We expect the factors that have inhibited lodging performance during the first half of 2013 will dissipate at the year goes on,” R. Mark Woodworth, President, PKF Hospitality Research, said. “By 2014, any uncertainty caused by fears of fiscal cliffs and sequestration should be alleviated, thus resulting in improved attitudes among hotel guests, owners and operators.”
Supply Shortage Fuels Full Rooms, Higher Rates
There may be improved attitudes among hotel guests, but they are also going to be dealing with reserving rooms at a higher price point.
“Starting in 2014, we foresee economic and market conditions that should allow managers to become more aggressive with their pricing policies,” Woodworth added.
Those managers will be welcoming more guests, too. With a forecasted national occupancy level of 63.8 percent, hoteliers are on a path that leads to the highest national occupancy rates since 1997.
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What the Numbers Mean for Meetings
As planners work to secure low room rates for attendees and discounts on room rentals and food and beverage costs, the PKF predictions mean that those negotiations may get more challenging.
“Since most conventions and meetings are held in the larger, luxury and upper-scale properties, this will present a challenge for planners,” Woodworth said. “Events will have to be booked further in advance, and planners are starting to concede the need to pay higher room rates.”
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However, not everything is perfect in the hotel industry. Click here to learn about five key challenges that hoteliers are facing right now.