The U.S. hotel industry is projected to experience continued year-over-year performance increases through 2016, according to STR and Tourism Economics’ most recent forecast released Thursday, 6 August at the 2015 Hotel Data Conference.
For the remainder of 2015, the U.S. hotel industry is predicted to report a 1.7% increase in occupancy to 65.5%, a 5.1% rise in average daily rate and a 6.8% increase in revenue per available room. During that same period, demand growth (+2.9%) is expected to outweigh supply growth (+1.2%).
“The next couple years will be great unless there’s an unknown factor we can’t anticipate,” said Amanda Hite, STR’s president and COO. Hite also noted that the hotel industry is in the part of the cycle where RevPAR will continue to be driven by rate.
When asked about the sustainability of key performance metrics performing at record levels, Hite stated, “We keep saying this won’t continue, but it keeps continuing.”
Among the Chain Scale segments in the U.S., Midscale and Independent are expected to report the largest increase in occupancy (+2.0%) during 2015; Luxury and Upscale are projected to see the greatest rise in ADR (+5.4%); and Economy is expected to report the highest increase in RevPAR (+7.2%).
For all of the Chain Scale segments, Hite pointed to “demand increases across the board.”
When looking at the Top 25 Markets, 21 are expected to experience RevPAR increases of 5.0% or higher during 2015. Three of those markets are expected to see RevPAR growth in the range of 10.0% to 15.0%: Denver, Colorado; Phoenix, Arizona; and Tampa/St. Petersburg, Florida.
For 2016, STR projects the U.S. hotel industry to post a 0.8% increase in occupancy to 66.0%, a 5.2% rise in ADR to and a 6.0% increase in RevPAR.
“2016 will not be as strong as this year,” said Hite, but “there’s opportunity for rate growth.”
Also in 2016, demand growth (+2.2%) is once again expected to be higher than supply growth (+1.4%). Demand growth in the U.S. has outpaced supply growth in each year dating back to 2010.
All but four of the Top 25 Markets are expected to post RevPAR increases between 5.0% and 10.0% in 2016.
Hite cited supply in Houston as “something to watch” and that “New York City is performing as expected (relatively flat).” But overall, “there is good news across the board for the Top 25 Markets.”