Hotel Lodging Outlook

basic modern hotel suiteTexas hotel room occupancy ran past 59% in the first quarter of 2011, just under the long term average. It’s a welcome development for the state’s hospitality industry, which saw occupancy dive below 50% during the recession.

Bruce Walker is with hotel consulting firm Source Strategies, based in San Antonio. Much of the pickup, he says, comes from regions tied to the oil business.

“We see a lot of growth in Midland-Odessa, Laredo, Victoria, non-metro areas, and also Houston.”

The real driver of the industry, though, is how much revenue hotels earn per room.  That, Walker says, isn’t likely to reach pre-recession levels for another two years.

“It’s been so competitive in this down economy that people have cut prices, so the yield on a hotel room has been not what it should be.”

The hotel industry tends to be an accurate barometer for the larger economy. Roughly half its revenue comes consumer spending on leisure travel and half from business spending.

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