Supply Slowdown Powers Corp. Housing Rates

Date: May 12 2008
Source: BTNOnline
Website: http://www.btnmag.com/businesstravelnews/headlines/frontpage_display.jsp?vnu_content_id=1003801819

Following a record year in 2006, corporate housing supply grew just 1.4 percent last year, though the figure belies the fact that industry inventory is now at its highest recorded point, according to the 2008 Corporate Housing Industry Report, conducted by Atlanta's Highland Group and the Corporate Housing Providers Association. An estimated 77,799 units were available in 2007, well above the industry's previous peak of 76,400 in 1999.

This growth is in line with the hotel industry, which saw U.S. room supply rise 1.3 percent and demand increase 1.1 percent, according to Smith Travel Research.

Meanwhile, corporate housing revenue climbed 20 percent from 2006 to $2.95 billion, according to the report. In light of the cooling economic climate, 2008 growth is expected to be temperate.

"Corporate housing is really an industry that responds to the economy," said Peggy Berg, president of the Highland Group. "The actual numbers are up; it's just that the pace of increase has slowed down. The number of units has grown, but it's not gaining as fast and that's a function of the economy, as it softened in the last half of 2007. It's reasonable to look at a very slow growth or fairly static year in 2008."