PKF Hospitality Research released an updated forecast this morning detailing their bearish view of 2010. This is the first forecast we have seen, other than our own, forecasting negative 2010 RevPAR (including prior PKF reports). The president of PKF, Mark Woodworth, states that 2011 is the next time we will see "actual growth". We have been predicting a down year in 2010 since January.
While we have got company, we are still outnumbered. Sell-side firms continue to project flat-to-positive RevPAR growth in their models. A recent upgrade was based partly on a "modest RevPAR recovery" in 2010. Although certain economic indicators have shown signs of improvement (or at least less deterioration) recently, the lodging industry still faces significant challenges that we alluded to in our 01/29/2009 post, "A GIRAFFE FROM HEAD TO TAIL".
We expect any potential increase in demand in 2010 to be driven by lower rates. Convention business booked in 2009 will be a drag on RevPAR for a couple of years. Furthermore, ongoing corporate negotiations for 2010 are occurring in a buyer's market.
The chart below shows the recent RevPAR trend in the United States. Unlike most consumer discretionary sectors, there is scant evidence of sustainable sequential improvement in lodging demand.