U.S. hotel industry performance will remain solid, although a slower rate of growth is being widely accepted, according to Wednesday morning general session panelists at the sold-out 2016 Hotel Data Conference.
Co-hosted by STR and Hotel News Now at the Omni Nashville Hotel, the Hotel Data Conference sold out for the third consecutive year with 525 attendees.
“I say it’s not the time to panic. I think it’s okay to accept that growth is going to slow,” said Carter Wilson, STR’s VP of consulting and analytics. “Growth is going to stall. But in the absence of some unforeseen major event, I don’t think we’re staring at the brink of a fiery crash.”
Among his reasons for remaining optimistic about performance, Wilson cited several key data points as the industry continues to set records:
- In 12-month moving average, absolute occupancy is 65.4%, having peaked at 65.5% in April;
- average daily rate (US$123) is at an all-time high in 12-month moving average;
- revenue per available room (12MMA US$80) has increased in year-over-year comparisons for 77 consecutive months; and
- in July, the U.S. hotel industry sold more roomnights (approximately 117 million) than any other month on record.
Wilson also noted that real profits are close to peak levels, the amount of new supply entering the market is “not devastating” and the economy is still good as it applies to the hotel industry.
Among his factors for concern, Wilson cited:
- Downgraded RevPAR expectations during Q2 earnings calls;
- a disconnect between how Wall Street values the industry and actual industry performance; and
- uncontrollable factors for the hotel industry such as labor costs, Zika virus concerns and oil prices.
Adam Sacks, president of Tourism Economics, cited his company’s composite index of economic indicators to predict the future of the industry and indicated that the risk for a downturn has risen, but is ultimately still low.
“Typically, the composite index has to get over at least 50, and in most cases over 70 or 80 (to indicate an impending recession),” Sacks said. “Now, we’re peaking at 30 and coming back down. We’re not seeing any of the signs we typically see of a recession.”
In addition, Sacks highlighted two general trends that are affecting the hotel industry:
- the growing priority of travel and tourism among the general public, coupled with increasing consumer confidence and disposable income; and
- the tightening of corporate spending that is reducing business travel.
“Capital investment is historically correlated with business travel,” Sacks said. “Companies view it as not a necessary expense but one that can be made for future returns.”
Overall, the 2016 Hotel Data Conference will comprise more than 100 speakers in four general sessions, 18 breakout sessions, 23 breakout “data dash” sessions and six advanced-level “data dive” discussions. All told, the conference will feature approximately 820 minutes of hotel industry data.