Based on a survey of hotel managers conducted in January 2008, over half (56.7 percent) the hotels in the United States will not achieve their budgeted profit target for 2008. Hotel managers appear to be relying on their ability to control operating costs since 65.1 percent of these same operators stated they will not reach their projected levels of revenue for the year.

These survey results reflect the deteriorating outlook for the U.S. lodging market. In the fall of 2007 when most managers were preparing their budgets for the following year, analysts were forecasting RevPAR to increase 4.5 percent in 2008. At that time, economists foresaw a slowdown in the pace of economic growth, but were not forecasting a recession. Since then, the outlook for the nation's economy has worsened. Accordingly, the current RevPAR growth estimate for 2008 has been reduced to 3.0 percent.

The primary reason cited by hotel managers for their inability to achieve their 2008 budgeted revenue was a shortfall in the number of rooms they will accommodate. Approximately 64.0 percent of the managers surveyed believe they will miss their budgeted occupancy rate for year. When asked to review the different demand categories, more than 60.0 percent of the survey participants felt they would fall short of their budgeted room nights in the commercial and leisure segments. Conversely, 53.4 percent of the operators think that the group meetings market will live up to expectations.

Management's outlook for room rates is more optimistic than their thoughts regarding occupancy. Just over half (51.8 percent) of the operators surveyed believe they will be able to hit, or exceed, their budgeted ADR for 2008.