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EFC Hotel News Update
|April 20, 2015
Hotel Market Profitability Forecasts, US Online ADR, HIP &
Our hotels team is hard at work bringing in a whole slue of new
hotel information for our clients worldwide.
With our most
recent international profitability forecasts, we had a few
questions on our outlook and will share our responses below to help
build your understanding of our reports and coverage.
also highlight some of our US online ADR and profits info we
produce each month in conjunction with trivago and our HIP & HIL
indicators for our major markets.
Any questions on what we
can do for you and your properties, just let us know.
you as always for keeping up with our hotel data and insights.
The e-forecasting.com hotel research Team!
Hotel Profitability Forecasts Q&A
Can you help explain your
seemingly high GOPPAR growth for 2015 for Dubai?
Answer 1: The forecast reflects an “abnormal” factual data on GOPPAR that took place in 2014 and there is not a seemingly error in the modeling or forecast values. Specifically, the growth rate (43.67%) is calculated comparing actual (factual) data for 2014 with our forecast for 2015.
In 2014, during Ramadan period (third quarter), Dubai hoteliers realized GOPPAR of just $62.75 (by month: Jul $0.07, Aug $76.62, Sep $111.58). This compares with $308.55 in the first quarter, $216.25 in the second quarter, and $299.64 in the fourth quarter. It seems Dubai hoteliers lower prices, kept services at same high levels (same costs) accepting zero profits (losses) in operations, given the Ramadan and the geopolitical situation at that time.
As the forecast table on page 9 shows, GOPPAR is forecast in the third quarter of 2015 is “normal,” assuming the abnormal conditions of 2014 will not be repeated. We forecast for the third quarter 2015 GOPPAR....
for more information on forecast results,
sign on for a report!
Question 2: Can you help explain your TRevPAR forecast for London?
In 2014 there has been a change in the relation between
RevPAR and TRevPAR with TRevPAR growing faster than RevPAr.
It was due to the changing mix of growth in demand from the
low growth countries to growing countries and to countries
with strong currencies, US, UAE, etc. As a result the
demand for non-room services has started to grow faster
than the demand for rooms.
In 2015 this trend will
continue as oil prices will be rising and dollar – club
currencies will be high. In addition, visitors from these
countries (including domestic) have a higher response for
non-room services (elasticity) with respect to a rise in
This high TRevPAR relation will peak
in the fall of 2015 and will converge in 2016 slightly
above growth parity, occupancy and room growth will stall.
Question 3: What kind of forecast error do you have?
Answer 3: Our average forecast error one
quarter out for the London market are as follows:
e−forecasting.com's Smoothed Seasonally Adjusted (SSA)˛ U.S. average online room rate has hit $197.35 in April. On a month-over-month basis - the hoteliers' analytic for tracking changes of what's now vs. what's happened in comparison to twelve months ago - SSA online ADR this April is up (+0.4%) from the previous month, which is the same percent change as in the previous month. Looking at the top-25 hotel destinations, the month-to-month percent change in April ranges from a high of (+2.6%) in Phoenix to a low of (−0.6%) in San Jose. Amongst the top-25 destinations, the SSA online monthly room rate is growing in 18 cities; and is falling or staying flat in 7 cities.
"The latest US Monthly Hotel Forecast predicts the US occupancy to average 63.1% in 2016 a decline of 1.6 percent points from 2015," said Maria Sogard, CEO of e-forecasting.com.
A Look @ HIP & HIL Around the World
US - HIP up 0.3%, six month growth rate above trend; HIL down 0.1% in February, recession probability 2.3%
UK - HIP up 0.9%, six month growth above trend, HIL up 0.7%, recession probability 1.4%
Germany - HIP up 0.3%, HIL up 0.1%, recession probability 28.2%
United Arab Emirates - HIP up 0.2%, HIL down 0.4%, recession probability 41.2%
* Data all pulled from our HIP and HIL reports,
available as highlights in our hotel forecasts
(profitability forecasts available quarterly) and as
separate reports which are updated monthly.
Philly Fed takes a snooze on updating state
leading indicators till further notice, we will continue to
maintain this important database, with our February results
now in. Poor Texas has declined five months in a row due to
lowered oil prices. How is your state and region doing? It
may be time to turn to e-forecasting as your true and
trusted source for
state leading indicators.
We have released our next round of quarterly hotel
profitability forecasts in partnership with
HotStats in key European markets, with the addition of
Dubai as well. Forecasts include 8 quarters of forecasts on
key performance metrics of TRevPAR, GOPPAR, RevPAR,
occupancy and room rate. These aren't your father's hotel
forecasts, welcome to the
next generation of hotel forecast reports.