The Rubicon Perspective

July 14, 2009
Volume 2, Issue 7

The Rubicon Perspective

Steve Swope

Steve Swope
Chairman & CEO

Glimpse of a Brighter Future

We began publishing the North American Hospitality Review in April 2008, and in that very first month we reported that while demand for the coming 12 months was still up year-over-year, the pace at which new demand was being added was significantly behind the prior year. In fact, month-after-month, the deterioration of new demand pace accelerated. It is obvious that accelerating shortfalls in demand pace eventually take their toll on occupancies. This in turn put pressure on pricing, and ultimately occupancy, ADR and RevPAR fall.

Likewise, stabilization or strengthening of demand pace for the future 12 months serves as the best outer marker or early alert of general market improvement and brighter days ahead. Looking closely at this critical measure, we observe that demand pace is no longer deteriorating but in fact has improved steadily over the past few months. In fact, the pace shortfall has been roughly halved since February when it was -31.8 percent to June's -16.5 percent. It isn't a cause for celebration, but the numbers are moving in the right direction at long last.

Naturally, we need several months of positive demand pace improvement to declare that recovery is at hand; however, the stabilization of demand pace and its impact are important to note. Transient occupancies are showing improvement as a result, and we note three consecutive months of year-over-year improvement. Currently, future transient demand trails last year by -10.9 percent, which is the best position so far this year especially when compared to the January outlook, which was -28.7 percent.

There is still a long way to go. There is undeniable weakness in group business and generally lower demand. Committed occupancy through second quarter 2010 is still putting pressure on average rates. Yet, amid all of this, the stabilization and improvement of demand pace — the very measure that served notice that the downturn would happen — provides us with a hopeful sign of better days to come.

Performance Summary

Based on group sales and reservations on the books for the coming 12 months in the 25 markets covered by the North American Hospitality Review, we observe the following performance versus this same time last year:

Measure

As of June 30, 2009

Total

Group

Transient

Total Committed Occupancy
(group block + transient reserved)

-12.4%

-13.2%

-10.9%

ADR (reserved)

-11.4%

-4.4%

-15.2%

RevPAR (reserved)

-19.2%

 
 

 

On an individual market level, the outlook continues to vary significantly. The chart below shows the year-over-year position of Occupancy, ADR and RevPAR based on business on the books over the next 12 months. Shades of green indicate performance better than the overall market average. Shades of red/orange indicate performance worse than the market average. Houston, Charlotte, Detroit and New York currently have the worst year-over-year RevPAR outlook. The first three gave up ground in the last month in both occupancy and ADR outlook. New York improved its ADR position slightly, but its occupancy outlook deteriorated. San Antonio, Minneapolis and Tampa currently have the best year-over-year RevPAR outlook.

Market

Occ

ADR

RevPAR

Atlanta

-6.7%

-2.0%

-20.2%

Boston

-6.8%

-8.6%

-17.9%

Charlotte

-17.7%

-9.7%

-35.3%

Chicago

-17.0%

-12.0%

-23.9%

Dallas

-9.7%

-4.2%

-17.8%

Denver

-18.0%

-12.1%

-29.4%

Detroit

-20.5%

-14.7%

-34.3%

Honolulu

-11.4%

-10.9%

-19.2%

Houston

-20.4%

-10.5%

-37.5%

Indianapolis

-0.4%

-6.8%

-17.4%

Los Angeles

-16.1%

-10.1%

-24.5%

Miami

-7.4%

-11.6%

-22.6%

Minneapolis St Paul

-9.4%

-12.3%

-12.5%

New York

-13.7%

-21.1%

-33.1%

Orlando

-16.2%

-10.0%

-24.0%

Philadelphia

-13.4%

-9.8%

-19.4%

Phoenix

-20.5%

-12.9%

-29.7%

San Antonio

-5.9%

-4.2%

-6.7%

San Diego

-6.6%

-10.0%

-19.7%

San Francisco

-14.4%

-11.6%

-25.0%

Seattle

-14.3%

-11.9%

-17.5%

St Louis

8.7%

-3.6%

-21.0%

Tampa

-13.6%

-6.6%

-13.7%

Toronto

-10.0%

-17.3%

-25.6%

Washington DC

-11.5%

-9.9%

-20.2%

 

The trends and observations found in The Rubicon Perspective are based upon an analysis of data from:

  • 25 key North American markets;
  • four major hotel companies and 2,111 hotels;
  • accounting for 132 million annual room nights;
  • and more than $20.2 billion in annual room revenue.

A more detailed report and analysis can be found in the July issues of The North American Hospitality Review and Executive Summary. Rubicon's IndustryIntel publications offer the most comprehensive insights into market trends available today. To subscribe to one of our publications, contact us at info@RubiconGroup.com.

 

About Rubicon

Rubicon (www.RubiconGroup.com) offers the broadest and deepest collection of market insight in the travel industry today. A leading provider of competitive market intelligence and market analysis for the global travel industry, Rubicon integrates competitive market information into the business planning and revenue management practices of its customers. Its flagship product, MarketVision®, offers a comprehensive suite of services that address market positioning in terms of price, demand and channel. Rubicon's publishing arm, IndustryIntel™, provides insights from the world's largest repository of future demand and cross-channel pricing data.

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