ADR erosion equals 47% of lodging revenue decrease in August

The erosion in Average Daily Rate represents to a greater extent a threat to the financial future of North Carolina’s lodging industry than the drop in demand. Analysis of STR’s projected $30.7 million decrease in lodging revenues for August confirms what many may instinctively know, but haven’t taken time to document.

For the month of August, forty-seven percent (47.2%) of the revenue decline, some $14.5 million, can be directly attributed to lower hotel rates. Lost demand, or room nights sold, accounted for the remaining $16.2 million.

Lodging Revenues August 2009 Statewide: $195,827,743
Lodging Revenues August 2008 Statewide: $226,544,978
Decline in Revenues ($30,717,235) 13.6% decrease

Lost revenues from drop in demand $16,233,791 52.8%
Lost revenues from discounted rates $14,483,445 47.2%