The U.S. hotel industry is projected to experience declines by the end of 2010 in two of the three key performance measurements, but begin to see a turnaround in 2011, according to Smith Travel Research’s (STR) monthly forecast update.

STR projects 2010 occupancy to be flat at 55.1 percent, average daily rate (ADR) to drop 3.2 percent to $94.39 and revenue per available room (RevPAR) to decrease 3.2 percent to $51.99. Supply growth and demand growth during 2010 are both expected to increase 1.8 percent.

“We have believed for quite some time that it will take the better part of 2010 for the hotel industry to regain its footing,” says Mark Lomanno, STR President. “Our latest forecast reflects what we believe will be a somewhat challenging first half of the year. Momentum will build in the second half of 2010, which will lead to the beginning of a turnaround in 2011.”

The outlook expects the industry’s performance to make a turnaround in 2011. STR projects increases in all three key performance metrics during 2011: Occupancy is projected to increase 2.2 percent to 56.3 percent; ADR is forecasted to increase 2.0 to $96.28; and RevPAR is expected to grow 4.2-percent to US$54.18. Supply in 2011 is also projected to grow 1.0 percent and demand is expected to increase 3.2 percent.