Hotel occupancy up in 2010, while prices fall

After one of the worst years on record, some metro Atlanta hoteliers may be able to look toward 2010 with some hope.

PKF Hospitality, one of the city’s main hotel industry analysts, predicts that overall occupancy will increase 0.7 percent in 2010 while average daily rate – the price visitors pay for an overnight stay – will improve 2.5 percent.

That contrasts with PKF’s national outlook, which sees occupancy rising slightly but average daily rate falling. PricewaterhouseCoopers also predicts a rise in occupancy, but says national average daily rates will be lower than in 2009.

Metro Atlanta’s improvements are tied to an increased number of conventions on the books for next year, said Robert Mandelbaum, PKF’s director of information research services. The more hotels rooms are filled, the more general managers can improve rates.

That might be more difficult than it appears. Convention attendance this year has fallen sharply, with turnout at some meetings down as much as 20 percent.

The Georgia World Congress Center, the city’s main meeting facility, predicts it could lose about $5.64 million in fiscal year 2010 -- which began this past July 1 -- in part because of disappointing convention attendance.

The health of metro Atlanta’s hotels is important to the area’s $11.4 billion hospitality industry. The metro’s abundance of hotel rooms -- about 93,000 -- is a driver for attracting business and visitation here.

Higher-tier hotels will perform better next year, partly because they suffered the most during the recent downturn, Mandelbaum said. Well-heeled hotels can expect occupancy to increase 2.5 percent with room rates up 2.2 percent.

The lower-tier will see occupancy drop 1.3 percent and room rates off one-half percent, he said.

Mark Vaughan, executive vice president and chief sales and marketing manager for the Atlanta Convention and Visitors Bureau, said the overall occupancy uptick is good news, but for rates to improve, demand has to catch up with supply.

Metro Atlanta will add another 4,000 rooms over the next year, he said. That includes the tony Loews Hotel in Midtown and a Marriott and Springhill Suites lodgers in the Gateway Center at Hartsfield-Jackson International Airport.

“The average daily rate does lag (occupancy) traditionally and that’s because demand is trying to catch up with supply,” Vaughan said.

Steven Spivak, director of sales and marketing for Loews, said he is upbeat about the future. While acknowledging that flat has become the new normal, he thinks Americans are ready to travel and that that may be why PKF is seeing a little more rosy 2010.

“Growth in any way, shape or form is a positive sign,” he said.