Since just touching on poor retail sales and the potential impact on retail real estate investment trusts, take a look at what is going on in the Hotel industry.  

Downtown Chicago hotels saw a 13.1 percent dive in the average occupancy rate, to 69 percent last month from a year earlier, according to Smith Travel Research. Nationwide, occupancy dropped 10.6 percent, to a 51.9 percent rate.

 

Pricing dropped as well, leading to double-digit declines in revenue per available room, a key measure of profitability. In downtown Chicago, the decline was 20.6 percent; nationally, it was 12.9 percent. 

Occupancy rates are, obviously, directly tied to cash flow for Hotel chains.  Unless those in the occupied rooms are purchasing a lot of extras (over priced nuts, little bottles of liquor, “room” service – you know, the normal things) the hotels are not pulling in the cash.  

As we saw with retail, that means travel REITs will potentially have a hard time servicing debt…