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Cautious Optimism for 2011

Members of the Lodging Hospitality roundtable believe 2011 will be better than ’10 and certainly ’09, but they’re not completely sold.

“We saw RevPAR improvements in 2010, so we’re cautiously optimistic 2011 will be a stronger year, driven primarily by gains in occupancy,” said Keith Pierce, president of brand operations in The Americas for Wyndham Hotel Group. “But it’s still a fragile environment, and any major negative economic occurrence could hurt us pretty quickly.”

Robert Habeeb, president and COO of First Hospitality Group, was a little more bullish, forecasting RevPAR growth of six percent or better this year. “And it’s not illogical to believe we’ll see some real significant rate appreciation as we get into a more normal supply and demand cycle,” he said, citing particularly strong growth in urban markets. “We’re finally getting some traction in downtown Chicago, which is a market that has lagged in rate for the past year and a half.”

Bjorn Hanson, dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University, applied a statistical analysis to his outlook for the year. According to Dr. Hanson, in the last six hotel industry cycles, the second year of recovery (in this case, 2011), hotel demand grew between 5.5 and six percent, versus the long-term growth rate of 2.2 percent. The consensus outlook for demand growth in 2011 is three percent, he said.

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