Economy’s woes check in at hotels

As Americans cut back on business and leisure travel during the recession, occupancy and room rates, as well as revenue per available room, are expected to fall dramatically this year. But the studies suggest Boston-area hotels have reached bottom, and the numbers are expected to improve next year.

At Boston-area hotels, revenue per available room - a key measure that factors in both occupancy and average daily room rates - is expected to fall 19.5 percent this year compared with 2008, according PKF Hospitality Research. In 2010, the decline is expected to be just half a percent.

“We’re not growing necessarily, we’re just doing less bad,’’ said Reed Woodworth, vice president of PKF Consulting.

Pinnacle Advisory Group is predicting a 13.2 percent drop in revenue per available room among suburban hotels inside Interstate 495 this year, and an 18.1 percent fall at Boston and Cambridge properties. In 2010, those numbers are expected to improve to 3 and 5.4 percent declines, respectively.

Nationally, hotel revenue per available room is expected to plunge about 18 percent this year and 3 percent next year, according to the average of figures from both hospitality groups.

“I don’t have any good news to share with you,’’ said Pinnacle co-owner Rachel Roginsky at the Sheraton Boston Hotel yesterday during the Outlook Boston presentation, an annual lodging industry forecast meeting.

Luxury properties have been the hardest hit by the recession. The revenue per available room at hotels with daily rates averaging more than $200 a room are expected to fall 22.1 percent from 2008 to 2009, according to PKF; occupancy is forecast to be down 14.7 percent.

Business travelers who might normally stay at ultraswanky hotels like the Mandarin Oriental, which opened last fall on Bolyston Street, are now trading down to more affordable hotels, Woodworth said. But he said luxury hotels in the suburbs - such as upscale boutique Hotel Indigo in Newton, a former Holiday Inn that got a $19.5 million makeover and reopened as an upscale boutique hotel in January 2008 - have probably been hurt even more.

“The worst thing to be right now is a bigger, more expensive property located outside the city of Boston,’’ he said.

The Hotel Indigo and the Mandarin Oriental did not return calls seeking comment.

Collegiate Hospitality, which owns the Inn at Harvard and the Harvard Square Hotel, is experiencing declines at both its properties, but the numbers are worse at its upscale hotel. The Inn, which has rooms starting around $199, has had a 17 percent decline in occupancy and a 15 percent drop in revenue from January to June of this year compared with the same period last year. At the lower-priced Harvard Square Hotel, with rooms starting at $159, occupancy and revenue have fallen 7 percent and 8 percent, respectively.

“We’re certainly seeing a shift’’ toward less expensive lodging, said revenue manager Caitlin MacNeil.

Hotels are dropping their rates to attract more budget-conscious travelers. Pinnacle is projecting that the average daily room rate this year will drop 5 percent in suburban hotels and 11 percent in Boston. In 2010, average room rates are expected to be down 4 percent and 3 percent in Boston and the suburbs, respectively.

But lowering prices can do more harm than good - a “death spiral of discounting,’’ as Woodworth puts it, that takes profits off the table. Indeed, from July until the end of the year, delinquencies are expected to double and foreclosures are expected to triple, according Trepp, a New York company that tracks commercial mortgages.

Boston’s hotels are faring about as well as those in the other top 25 markets, Pinnacle consultants said. And in 2011, the Boston area outlook will get considerably sunnier, according to PKF Hospitality, which is predicting a 10.6 percent increase in hotel revenue per available room that year.

One factor contributing to next year’s improved outlook is the lack of new hotels being built. Two new hotels are slated to open in Boston this year - the W Hotel and the Ames Hotel. But after years of steady growth, there are none opening in 2010, Pinnacle reported, which should help bring supply and demand closer together. Still, “We’re not going to get back to 2007 performance,’’ Woodworth warned, “until 2013 or 2014.’’

Katie Johnston Chase can be reached at johnstonchase@globe.com