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Lodging Industry Grows Again in 2008, but Anticipates Streak’s End

WASHINGTON — Make that six straight years of sales growth for the U.S. lodging industry.
Total industry revenue rose in 2008 to $140.6 billion, compared to $139.4 billion the previous year, according to The 2009 Lodging Industry Profile published by the American Hotel & Lodging Association (AH&LA). Figures are for year-end 2008. 2009 data won’t be available until mid-2010.
Total revenue was at $108.5 billion in 2000 before falling to $103.5 billion in 2001 and then $102.6 billion in 2002. U.S. lodging revenues have risen annually since then, from $105.3 billion in 2003 to $140.6 billion in 2008, according to Smith Travel Research.
The steady rise over the past several years can be attributed to a variety of reasons, the AH&LA says, including the industry’s ability to raise room rates — an average of $106.84 in 2008, up from $103.87 in ’07 — in response to increased demand from leisure and business travelers, and the availability of new hotels.
“The positive numbers illustrate that interest from both U.S. and international travelers translated into real dollars supporting a strong tourism product in 2008,” says AH&LA President/CEO Joseph A. McInerney, CHA. “However, with the softening of the economy in (the fourth quarter) of 2008 and into 2009, our industry will see an end to our six-year streak of increased profitability.”
Yearly pretax profits declined from $28 billion in 2007 to $25.8 billion in ’08. Revenue per available room (RevPAR) was also down, from $65.52 in ’07 to $64.37 in ’08. The average occupancy rate slid from 63.1% to 60.4%.
The annual profile traditionally lists the industry’s total sales, average occupancy rate, average room rate, employment impact, and other facts about lodging and the travel and tourism industries.
The 2008 statistics reported by AH&LA are based on 49,505 properties with 15 or more rooms that offered a total of approximately 4.63 million rooms. Stats for 2007 are based on 48,062 properties that offered roughly 4.48 million rooms.
In 2008, leisure travelers made up the largest segment of lodging customers at 57%, according to D.K. Shifflet & Associates. Business travelers accounted for 43%.
During a hotel stay, 41% of all leisure travelers spend one night, 31% spend two nights, and 28% spend three nights or more. Among business travelers, 35% spend one night, 26% spend two nights, and 39% spend three or more nights.
The typical “business room-night” is generated by a male (67%), age 35-54 (50%), employed in a professional or managerial position (43%), earning an average yearly household income of $105,532. Typically, these guests travel alone (58%), make reservations (92%), and pay $125 per room night.
The typical “leisure room-night” is generated by two adults (51%), ages 35-54 (40%), earning an average yearly household income of $91,155. The typical leisure traveler also travels by auto (78%), makes reservations (88%), and pays $112 per room night.
The United States receives a larger share of international tourism receipts than any other country in the world. International visitors accounted for 22% of all lodging room-nights in 2007, according to the Bureau of Economic Analysis, and this proportion likely increased in 2008 (that data is not yet available) due to the increase in foreign visitors and declines in U.S. domestic travel.
The outlook for 2009 calls for an 8% decline in the number of foreign visitors due to continuing changes in global economies and exchange rates that occurred in fall 2008. Moderate growth is expected to return in 2010 and 2011 due to strengthening economies and stable or improving exchange rates, but visitor volume should remain below 2008’s record of 58 million. Arrivals are down 10% through June 2009.
The U.S. travel and tourism industry pays $194 billion in travel-related wages and salaries and employs 1.8 million hotel property workers.
 

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