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Modest growth to continue for U.S. hotels

Profile Photo By: Carsten Hennig
June 7, 2017

Modest growth to continue for U.S. hotels

New York City – 7 June 2017 –
The U.S. hotel industry is projected to report continued modest growth through 2018, according to STR and Tourism Economics’ latest forecast released on Monday at the NYU International Hospitality Industry Investment Conference.

“The political and economic climate in the country continues to evolve with uncertainty. That coupled with lower than expected pricing power during the first quarter led us to decrease our ADR growth projections,” said Amanda Hite, STR’s president and CEO. “Nonetheless, signs continue to point toward business as usual for this stage in the industry cycle. Accelerating supply growth is pressuring occupancy levels, but rate increases will continue to push overall RevPAR growth—albeit below the historical average.” 

LAS VEGAS - MAY 2: The Caesars Palace Hotel is shown behind some of the fountains of the Bellagio Hotel (not shown) on May 2, 2007 in Las Vegas, Nevada. Caesars opened in 1966

2017
For total-year 2017, the U.S. hotel industry is predicted to report a 0.3% decrease in occupancy to 65.3%, a 2.5% rise in average daily rate (ADR) to US$127.13 and a 2.2% increase in revenue per available room (RevPAR) to US$82.98. RevPAR grew more than 3.0% for each year from 2010 to 2016. 

None of the seven Chain Scale segments is projected to report a year-over-year increase in occupancy. The Independent segment is likely to report the largest increases in ADR (+2.8%) and RevPAR (+2.7%). The lowest rate of overall performance growth is expected in the Upscale segment (RevPAR +0.9%).

Nineteen of the Top 25 Markets are expected to post flat or growing RevPAR for the full year. While most markets will likely see an increase between 0% and 5%, Seattle, Washington, is the only U.S. market expected to record growth in the range of 5% and 10%. 

2018
For 2018, STR and Tourism Economics project the U.S. hotel industry to report a 0.2% decrease in occupancy to 65.1% but increases in ADR (+2.7% to US$130.59) and RevPAR (+2.5% to US$85.07). The Upper Upscale segment is expected to see flat occupancy—the only Chain Scale segment not expected to report a decrease in the metric. The Luxury segment is projected to report the largest increases in ADR (+2.9%) and RevPAR (+2.8%).

All Top 25 Markets, with the exception of Boston, Massachusetts, and Miami/Hialeah, Florida, are likely to see RevPAR performance between 0% and +5%. Each of those two markets is projected between 0% and -5% in RevPAR. 

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