Highlights include Marriott International (MAR) and Starwood Hotels & Resorts (HOT).

The operating environment in the lodging industry is showing no signs of stabilization, as both occupancy levels and room rates have continued to deteriorate.

According to data from Smith Travel Research, Inc., the average occupancy level in the U.S. fell approximately 12% year-over-year during the 4-week period ended March 7th. Over that same period, average daily room rates, or ADR, fell by roughly 7.8% year-over-year, leading to an overall average decline in revenue per available room, or RevPAR, of nearly 19% year-over-year during the period.

The trend of declines during this period is far from encouraging, as the annual RevPAR decline increased in each consecutive week. RevPAR was down 23.0% in the first week of March.

Certainly, it has been difficult to find any signs of encouragement in the weekly hotel operating data this year. And in the near term, we do not expect any material improvement in the reported operating metrics.

Looking further out, however, the fact that occupancy declines have been responsible for the majority of the RevPAR declines indicates that hotel owners and operators may be focusing on doing what they can to limit the discounting of rooms rates.

Ultimately, the ability of lodging companies to maintain room rates as much as possible should have the most significant impact on their ability to weather the downturn. Cutting rates meaningfully should be an absolute last ditch effort to survive, because changes in rate have the biggest impact on the bottom line, and are hardest to recoup when the operating environment improves.

When hotel companies like Sell-rated Marriott (MAR) and Hold-rated Starwood (HOT) report 1st quarter results next month, we will be focusing more attention on the changes in ADR than the declines in occupancy. By keeping an eye on changes in ADR, investors can gain some insight as to which companies are best poised to benefit when economic growth returns.