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U.S. LODGING TURNING POINT ARRIVES
BUT GROWTH REMAINS ON DISTANT HORIZON
PKF Hospitality Research (PKF-HR) recently announced that, according to its June 2009 edition of Hotel Horizons®, rooms revenue per available room (RevPAR) will reach its cyclical low point in the third quarter of 2009. This will bring to a close the escalating trend of declines in RevPAR that began in the third quarter of 2008, according to Smith Travel Research (STR).
In May 2009, Moody’s Economy.com downgraded its outlook of a 2.9 percent national employment decline to 3.8 percent, causing PKF-HR to revise its RevPAR forecast for the year. Given the correlation between employment and lodging demand, the new expectation is for RevPAR to decline 17.5 percent in 2009, followed by another 3.5 percent decline in 2010.
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WHAT’S HAPPENING IN YOUR NECK OF THE WOODS?
New Forecast Reports Available for the Nation and 50 U.S. Cities
“You Say Cap Rate, I Say Cap Rate, We All Say Cap Rate”
Dear Friend of PKF:
In a recent meeting with some investor clients we were discussing the cyclical movements of hotel capitalization rates and expectations for the next one-to-two years. It quickly became clear that there were multiple definitions of the term “cap rate”. While reminiscent of that famous line “it depends upon what the definition of is is”, and as I often do, I turned to my colleague Jack Corgel, Senior Advisor to PKF Hospitality Research and the Robert C. Baker Chair of Real Estate at the School of Hotel Administration at Cornell University. Jack’s answer to my query, "What is the correct definition of cap rate?" follows.
Thanks for your continued interest.
R. Mark Woodworth
President
PKF Hospitality Research
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Rooms |
Food and Beverage |
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Administrative and General |
Sales and Marketing |
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Maintenance / Utilities |
Labor Costs |
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Room Service and Banquet Charges
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Information Systems Expenses
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