Hotel Rates Down 8.8 Percent This Year

NEW YORK (AP) — Hotel room prices are expected to drop a total of 8.8 percent in 2009 compared to 2008 and will continue creeping down in 2010, though at a much slower rate, according to the 2010 lodging forecast from PricewaterhouseCoopers Hospitality & Leisure Practice.

"It is expected that the steepest declines in ADR (average daily rates) have passed, but that year-over-year ADR levels will continue to decline, resulting in a 1.8 percent decline" next year, PricewaterhouseCoopers said.

A 3.2 percent increase in the number of hotel rooms this year added to the hotel industry's problems, PricewaterhouseCoopers said, expanding supply just as consumer demand weakened and further hurting the ability of hotel operators to maintain stable pricing.

Many new hotels, including a number of luxury projects and high-end renovations like the Fontainebleau in Miami and the Roosevelt in New Orleans, have opened during the recession as projects that were planned before the downturn came to fruition.

Occupancy levels for 2009 are expected to decrease 8.4 percent over the previous year to 55.2 percent, PricewaterhouseCoopers said, meaning that hotels in 2009 will be on average just over half-occupied.