Tesla Industry Report
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Industrybackground.pdf
APPENDIX A--Background
The Hotel Industry In The United States
by Joel N. Morse, Ph.D.
INTRODUCTION
The hotel industry of the United States has experienced slowdowns in the year 2009 because
of the recent economic slump. But slowly the industry is now recovering from the losses
incurred earlier. The outlook for growth of the hotel industry in the United States is expected
to be positive at the end of the year 2010 or by the middle of 2011. The performance of the
three key factors that represent the growth of the United States’ hotel sectors are discussed
below with respect to the year 2010. Several other topics related to the growth and failures of
the hotel industry of the United States are discussed, as well as metrics that are used in this
industry.
CURRENT SCENARIO
Due to the economic situation that began in 2008, certain hotels in some of the most
expensive cities of the United States dropped the prices of their hotel rooms to revive
occupancy rates. Marriott and Hilton are two such major chains of hotels which reduced
room tariffs in order to overcome their losses.
PERFORMANCE OF THE HOTEL INDUSTRY DURING JUNE 2010
During June, 2010, the hotel industry in the United States experienced some increase in the
performance of several measures of hotel occupancy and profitability. In year-on-year
measurements of the hotel industry reported that there was an increase of 1% in the average
daily rate (ADR) at the end of the month, leading to US$98.33. The occupancy rate (OR)
also increased, to 65%. 1
Occupancy for June, 2010
During June, 2010, some of the highest ranked markets of the United States economy marked
an increase in their occupancy rates. The lead was taken by Oahu Island, Hawaii with an
increase from 61.3% to 78.8%. It was then followed by Minneapolis-St. Paul, Minnesota-
Wisconsin and Denver, Colorado from 55.2% to 71.6% and 61.3% to 76.6% respectively.2
1 STR Reports US Hotel Industry Performance for June 2010. Retrieved August 5, 2010, from Asia Travel Tips:
http://www.asiatraveltips.com/news10/227-USHotelIndustry.shtml
2 STR Reports US Hotel Industry Performance for June 2010. Retrieved August 5, 2010, from Asia Travel Tips:
http://www.asiatraveltips.com/news10/227-USHotelIndustry.shtml
0
10
20
30
40
50
60
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90
Pre-June Period
During June Period
But overall, the hotel industry in the United States showed mixed results. San Francisco,
California reported the an increase in three key metrics of performance. For example, the
occupancy rate increased to 78% from 65.9%. Miami - Hialeah, Florida also showed positive
results. Its occupancy rates jumped to 63.3% from 53%, and Nashville, Tennessee increased
from 46.2% to 57.3%. However, certain markets of hotel industry in the United States
showed a decrease in their occupancy rates. The market with the highest decrease in the
occupancy was Louisiana in New Orleans which fell from 63% to 53.3%. Similarly,
Washington, DC reported a decrease of 75.2% to 66.3%. This was followed by Dallas, Texas
where there was a decrease from 58.8% to 50.1%. 3
FORECAST OF US HOTEL INDUSTRY
3 STR Reports US Hotel Performance for the Week Ending June 5 - 2010. Retrieved August 5, 2010, from Hotel
News Resource: http://www.hotelnewsresource.com/article46476.html
Industry sources acknowledge that the U.S. hotel industry will exhibit improved performance
in several key metrics by 2010-2011. It has been predicted that the room occupancy rate will
increase to 55.8%. In the United States, the demand for rooms is expected to increase by
about 4.1% and the supply to service this demand is expected only to grow by 2.2%, which
means that there will be a situation of excess demand at the margin. According to industry
experts , the recovery of the hotel industry will be turning positive during the second or the
third quarter of this year. The industry will also experience an increase in three basic
performance measures during the year 2011. 4 The statistics of occupancy, revenue per
available room and average daily rate are metrics or performance measures of interest. 5
US HOTEL OCCUPANCY RATES
The United States’ hotel industry should experience any upturn positive signs before the
commencement of the year 2011, governmental stimulus measures and "animal spirits"
ameliorate the recession that hit the world wide economy during 2008. 6
4 Stronger US Hotel Industry Forecast for 2010, 2011 (2010, April 8). Retrieved August 5, 2010, from Hotel
News Resource: http://www.hotelnewsresource.com/article44978.html
5 Urie, R.S. (2010, January 27). STR: US hotel industry ends '09 with double-digit RevPAR drop. Retrieved
August 5, 2010, from Bright Hub:
http://www.hotelnewsnow.com/Articles.aspx?ArticleId=2573&ArticleType=0
6 Slow recovery seen for U.S. hotel industry (2010, January 27). Retrieved August 5, 2010, from Reuters:
http://www.reuters.com/article/idUSTRE60Q4G920100127
During the period when the supply of the rooms was being handled, the occupancy rates of
the hotels in the United States had fallen marginally as compared with the previous records.
However, it has been forecasted that during this year the occupancy rates are going to
increase to 55.4% as compared with the last year’s occupancy rate, which was 55.1%. But
this statistic which has been forecasted for this current year is somewhat below the 20 year
average which is approximately 62.8%. Hoteliers in the United States state that pricing
power will return once they see a high rate of occupancy prevailing in the industry, which
should emerge in three to four years. 7
CONCLUSION
To conclude, the United States hotel industry is currently reacting to the economic crisis of
2008. But with time, the industry will be growing in most major aspects.
REFERENCES
Sharkey, J. (2010, July 5). Credit Card Hackers Visit Hotels All Too Often. Retrieved August
5, 2010, from New York Times:
http://www.nytimes.com/2010/07/06/business/06road.html?_r=1
7 Slow recovery seen for U.S. hotel industry (2010, January 27). Retrieved August 5, 2010, from Reuters:
http://www.reuters.com/article/idUSTRE60Q4G920100127
Slow recovery seen for U.S. hotel industry (2010, January 27). Retrieved August 5, 2010,
from Reuters: http://www.reuters.com/article/idUSTRE60Q4G920100127
STR Reports US Hotel Industry Performance for June 2010. Retrieved August 5, 2010, from
Asia Travel Tips: http://www.asiatraveltips.com/news10/227-USHotelIndustry.shtml
STR Reports US Hotel Performance for the Week Ending June 5 – 2010 (2010, June 11).
Retrieved August 5, 2010, from Hotel News Resource:
http://www.hotelnewsresource.com/article46476.html
Stronger US Hotel Industry Forecast for 2010, 2011 (2010, April 8). Retrieved August 5,
2010, from Hotel News Resource: http://www.hotelnewsresource.com/article44978.html
Urie, R.S. (2010, January 27). STR: US hotel industry ends '09 with double-digit RevPAR
drop. Retrieved August 5, 2010, from Bright Hub:
http://www.hotelnewsnow.com/Articles.aspx?ArticleId=2573&ArticleType=0
US hospitality industry in doldrums (2010, May 17). Retrieved August 5, 2010, from Press
TV: http://www.presstv.ir/detail.aspx?id=126742§ionid=3510203
