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Monday, November 24, 2008

Declines seen in all three key hospitality measures in October

This week, Hendersonville TN based Smith Travel Research posted October 2008 results for the hospitality industry. No surprise that all three key performance measurements showed a decline, including the first year-over-year decline in ADR (average daily room rate) in more than five years. This indicates that hoteliers are bending under the pressure of lower occupancy and trying to recover by discounting. This is a slippery slope.

Year to date, we are seeing a 3.4% decline in occupancy, with a 6.5% decline year-over-year for the month of October. This is not surprising since air travel frequency and capacity in most cities is seeing a 15-20% decline.

The fourth quarter is traditionally one of the worst quarters in travel, largely due to the fact that the two major holidays in November and December are the "over the river and through the woods" kinds of vacations - by car and a large amount of friends and family visits, versus vacations.

The first quarter of 2009 will be telling, that is when booking volumes normally increase substantially. So we wait....
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