TBO.com - TBO is Tampa Bay Online

Hernando Today

Hotel Industry Expected To Suffer In 2009

ADVERTISEMENT

By TONY HOLT

Hernando Today

Published: January 30, 2009

TAMPA - If there is a spurt in hotel bookings for this weekend's Super Bowl, it might be forgotten as soon as all the confetti is vacuumed and the hangovers subside.

Recent data show there will be a significant decline in occupancies this year and it could result in thinner revenue streams and an increase in defaults.

"The forecast for occupancies is the lowest in 30 years," said Robert Mandelbaum, of PKF Hospitality Research out of Atlanta.

The industry, Mandelbaum said, is experiencing a "double hit." There is the recession, which has cut back on business and leisure travel.

Secondly, there is an increase in the number of hotels. The industry experienced a profitable period in 2006 and it overshot expectations.

A lot of plans were made to build hotels in 2006 and 2007, which means a lot were built last year and more will emerge this year and in 2010. Supply is far outweighing demand and there will be another 125,000 net new rooms by the end of next year, analysts have said.

"We're seeing the worst of both worlds," said Mandelbaum.

Hotels nationwide reportedly carry approximately $250 billion in mortgage debt.

Ridge Manor recently added two hotels - a Holiday Inn Express and Microtel - both of which are located along Interstate 75. Occupancies have been low, but they are not alone.

The number of full-service hotels in the U.S. that will lack the cash flow necessary to pay their debts will increase by 25 percent in 2009. Property values also will decrease by more than 20 percent (they decreased by 14 percent in 2008), according to a report by PKF Hospitality Research.

The national average for occupancy in 2009 is expected to be 57.2 percent - a 5.5-percent drop compared to the 20-year average.

The hotel industry's forecast for 2009 is worse even compared to 2001, when Americans were more nervous about traveling after the Sept. 11, 2001, terrorist attacks, Mandelbaum said.

Many hotels in the region, particularly in Pinellas County, were expecting swarms of people this weekend, but reservations had not met expectations as of Thursday.

They should still be thankful for any added business, given the state of the industry, Mandelbaum said.

"This year, there are a lot of cities that would die for a chance to host a Super Bowl," he said.

Reporter Tony Holt can be reached at 352-544-5283 or wholt@hernandotoday.com.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT