Hotel Industry Recovery: As Rooms Fill, Rates Will Rise

Industry analysts and hoteliers agree that 2009 was the worst year in the history of the hotel business. Not surprisingly, they’re only admitting that now as fortunes appear to be on the rise again — it doesn’t do to preach doom when you’re still trying to sell franchises or attract investors.

What that means for travellers is that rate increases are just around the corner. As Business Travel News reported this week, a recent investment conference in New York gave lodging leaders a forum to express their recession experiences. “What happened last year was really the perfect storm,” said Best Western CEO David Kong. “Demand went down substantially, almost 6 percent, and at the same time supply grew by 3.2 percent.” “Corporate business just fell off a cliff,” said Monty Bennett, CEO of upscale hotel owner Ashford Hospitality.

“When all these companies cut back all corporate travel, they made their profits by cutting expenses. Now that they’re looking to grow profits, they can’t cut expenses anymore.” The turnaround is underway, with hotels reporting higher occupancy through the first few months of 2010.

 Rates, which plummeted to very consumer-friendly levels during the recession, have yet to bounce back, but hoteliers believe that’s just a matter of time.