According to a forecast by analytics and information services firm STR, the hotel industry is going to close 2010 with increases in occupancy and room revenue. While these increases are hopeful signs, an underlying recovery is still considered tenuous.

STR is projecting 2010 occupancy to increase 3.6 percent to 56.7 percent. Revenue per available room will jump 3 percent to $55.13. In the meantime, average daily rate will drop slightly by .6 percent to $97.26.

The increases will be lead by the luxury chains, said Mark Lomanno, president of STR. "It's definitely going to be a luxury/upper upscale-led recovery, which is a textbook recovery," he said in a statement.

Nevertheless, with supply and demand expected to grow 2 percent and 5.7 percent, respectively, a flat ADR is conspiring to weaken a recovery. "Demand is improving; ADR is not," added Lomanno. "That means there is an extremely fragile recovery. With occupancy being the driver, that's the most tenuous of recoveries to have."

Longer-term prospects are looking better, says STR. ADR will make a comeback in 2011, along with the other key performance metrics.  ADR is projected to jump 3.9 percent to $101.05, occupancy will increase 2.5 percent to 58.1 percent and RevPAR will rise 6.5 percent to $58.70.