Boston hotels less likely to feel airline downturn

Hotel News - 21/07/2008

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According to a recent analysis that was conducted by Atlanta-based PKF Hospitality Research, a capacity reduction of 10 percent of passengers flown to US airports is corresponding to a 3.9 percent decrease in demand for hotel rooms – as compared to the 3.3 percent drop seen post September 11. The new numbers could mean around 40 million fewer rooms occupied for a given night, or $4.3 billion lost revenue for the hospitality industry.

Although Boston’s average room rates are currently the second-highest in the country, PKF is predicting that hotels in Boston won’t feel the impact as severely, as over 75 percent are higher-end properties, meaning that their guests aren’t as susceptible to higher airfares. Also, many visitors to Boston arrive by train, bus, and car, meaning that they are not as likely to cancel their visits when airlines reduce service.

The PKF calculations are based on comparing 20 years of the interrelationship between hotel bookings and airline capacity. Typically, a one percent decline in airline capacity within the U.S. results in a decline of 0.39 percent in demand at the country’s hotels.

"If you are an owner at a hotel or if you work at a hotel, lower demand obviously means less business, and less business means we don't need as many people working in our hotels," noted the president of PKF, Mark Woodworth.

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