As we begin a new year, it seems like a good time to turn the page and talk less about recession and recovery, and to focus more on the prospects for sustained growth in the coming year. Based on advance group sales and reservations data Rubicon collects from major hotel companies, we can get an initial indication of what to expect for 2011. As of the end of November, committed demand for the current quarter and the first three quarters of 2011 is ahead of the same time last year by 6.7 percent. This means that hotels are carrying a strong book of business into 2011, getting the new year off to a good start.
Transient demand continues to lead occupancy growth, with transient room nights ahead of the same time last year by 7.3 percent. Business demand (transient weekday retail and negotiated segments) in particular has been and remains very strong, with reserved room nights up 12.8 percent year over year. Transient leisure demand is growing as well, though at a far slower rate.
Group business continues to strengthen, albeit at slightly lower rates than last year. Group commitments for the next 12 months are up 6.1 percent year-over-year, and for the first quarter of 2011 alone they are up 7.0 percent. Group booking pace continues to improve, with new bookings added over the past month up 4.9 percent over the comparable period last year. Group ADR is behind by 2.2 percent year-over-year.
One clear sign of improving fundamentals is the stabilization of ADR. The ADR for reservations on the books for the current plus three future quarters is up 1.6 percent compared to the same time last year. With mid-week business demand returning, transient ADR continues to improve, increasing by 2 percent. Additionally, fewer hotels are offering deep discounts, and more hotels are raising rates. Of the 25 North American markets Rubicon regularly monitors, ADR in New York is escalating faster than most, with ADR up 4.5 percent year-over-year during the fourth quarter of 2010, and ADR for business currently on the books for the first quarter of 2011 up 12.2 percent year-over-year.
For 2011, it will be the combination of continued occupancy growth, higher rates, and improving business mix that will keep ADR and RevPAR moving in the right direction.
Lloyd Biddle is strategic manager at Rubicon, www.therubicongroup.com.