Report Expects Chain-Affiliated Occupancy To Rise In 2003

NEW YORK— A recent forecast put out by Torto Wheaton Research and Hospitality Research Group that tracked chain-affiliated hotels only revealed that occupancy at these properties is expected to rise towards long-run average levels in 2003, while ADR is predicted to remain flat. Moreover, the study stated that occupancy in this sector is forecast to increase by a moderate 2.8 percentage points and a very slight 0.9% increase is forecast for average daily rates during 2003. As a result, the report stated that RevPAR growth is forecast to turn positive in 2003 and increase 5.5% by year-end, which is only slightly lower than the previous increase forecast by the HRG/TWR model. The bulk of this RevPAR growth should happen in the second half of 2003, as the forecast expected the first two quarters of the year to register an average RevPAR increase of only 2.8%. In addition, the firm’s research showed that hotel room rate declines are expected to finally stop by the end of 2002 and remain stable through 2003. Slight growth is expected in ADR in the second half of 2003, which will be followed by reasonable room rate growth in 2004 and 2005, according to the study. To go segment by segment, the research demonstrated that the 2003 outlooks for full- and limited-service segments of the hotel market differ. The full-service segment is expected to grow strongly from 2003 through 2005 with RevPAR increases ranging between 6% and 10% the study pointed out. While the recovery of the limited-service segment is said to be strong as well, it won’t start until 2004. During 2003, occupancy for the chain-affiliated full-service market is forecast to increase by 3.5 percentage points, while ADR is forecast to remain relatively flat, the report stated. The two wild cards that could muddy the water according to the report are war with Iraq and a stagnant economy.