Forecasts from the May 2009 Hotel Market Forecast report from STR Global, the leading provider of market information to the world’s hotel industry, indicate that average daily rate declines during the next 24 months across Germany’s major cities will be the main cause of the industry’s sluggish performance. Just as positive recent data from Germany’s Ifo business climate index on the prospects for the German economy is tempered with on-going fears of further job losses, limited improvements in hotel occupancy during the next two years are offset by the rate declines. See the chart below. Even in those cities such as Hamburg and Munich where there are expectations of modest increases in occupancy of up to 2 percent and 3 percent in 2010, respectively, the forecasted decreases in room rate are 6 to7 percent.

Given the fast changing economic climate, the Hotel Market Forecast from STR Global is updated each month. “It is vital to look regularly at how the local economic conditions are affecting our industry”, said James Chappell, managing director of STR Global. “The Hotel Market Forecast gives subscribers essential, regular visibility on what is likely to happen, which is increasingly relevant in these turbulent times”.

The Hotel Market Forecast product was launched earlier this year and the seven German markets detailed above are part of the 42 markets and sub-markets across Europe covered by the reports. The forecasts are based upon the most recent available economic data and STR Global’s historic market data from previous business cycles. The advanced model is run in conjunction with e-forecasting.com, an international economic research and consulting firm, and considers about 300 economic indicators, including gross domestic product, the price of oil, exchange rates, consumer confidence and business sentiment. It also takes into account local drivers of a particular market. “We have been looking at these models for several years now and with each market having a unique model to predict future performance that includes the impact of destination brand and major local events, the reports enable subscribers to keep an eye on specific upcoming conditions,” explained Chappell. The Hotel Market Forecast reports are made more useful by two additional features. Firstly the reports will show how close the forecast was to what actually happened, so that trends can be better understood and charted. And secondly, 18 months of historical hotel performance data allows the forecast to be set in context.