Is there room at the inn? Odds are, yes, there is room…too much room. That means there’s less need for more rooms—and what’s bad for the hotel business is equally bad for the construction industry.
The statistics tell a grim story. U.S. hotel occupancy rates have been dropping since 2007, and by the fourth quarter of 2009 they had hit 50.6%, according to travel-industry research firm STR. That has pushed down room rates in those rooms that hotels are able to fill, and that in turn means much lower average revenue per available room, one of the industry’s most important measurements. In Chicago, for example, revenue per available room was down by more than 15% at the end of 2009, one of the nation’s worst showings.