US hotels post room revenue decline in August

The U.S. hotel industry's revenue per available room dipped 0.8 percent to finish last month at $72.18, according to data from Smith Travel Research.

The industry's average daily rate grew 2.8 percent compared with August 2007, ending the month at $107.01. Industry occupancy, however, fell 3.5 percent to 67.5 percent.

STR Vice President Brad Garner noted that demand remained soft despite getting a boost in the last week of the month from the Labor Day holiday and the Democratic National Convention in Denver, Colo.

For the first seven months of the year, room rate increases managed to offset occupancy declines, boosting revpar by 1 percent. Year-to-date occupancy fell 2.6 percent while the average daily rate climbed 3.8 percent.

Garner said a 2.4 increase in supply this year contributed to the occupancy shortfall.

"Rate integrity inspired the 1 percent growth in industry wide revpar," Garner said. "Most hoteliers and operators, as the data suggest, are putting into practice valuable lessons learned from rampant discounting in the previous downturn."

But as demand declines have continued in the first three weeks of September, analysts are questioning how much longer hotels can maintain price increases. Oppenheimer & Co. analyst David Katz said he expects that more hotels will be willing to discount rates if demand continues to fall.