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STR, TE lower U.S. hotel growth projections in final forecast of 2018

November 19, 2018 Hotel Trends No Comments Email Email

STR and Tourism Economics’ final U.S. hotel forecast revision of this year projects a lower level of performance growth for 2018 and 2019.

“Our last forecast update in August had RevPAR growth at 3.2% and 2.6% for 2018 and 2019, respectively,” said Amanda Hite, STR’s president and CEO. “We knew the third quarter of this year would be tough because of comparisons with the post-hurricane demand period of 2017, but demand still came in lower than expected. Regardless, industry performance is still growing. There are issues such as rising labor costs, but the macroeconomic environment remains favorable overall, and the industry’s record-breaking run should continue through at least 2019 even with softening in overall growth.”

2018 Forecast 2019 Forecast
Supply +2.0% +1.9%
Demand +2.4% +2.0%
Occupancy +0.4% +0.1%
ADR +2.6% +2.3%
RevPAR +3.0% +2.4%
Source: STR/Tourism Economics

For the total year, the U.S. hotel industry is projected to report a 0.4% increase in occupancy to 66.2%, a 2.6% rise in average daily rate (ADR) to US$129.99 and a 3.0% lift in revenue per available room (RevPAR) to US$86.00. RevPAR has grown at least 3.0% for each year since 2010.

The Luxury, Economy and Independent chain scale segments are likely to match for the largest increase in occupancy (+0.7%). Luxury is expected to post the highest growth rates in ADR (+3.5%) and RevPAR (+4.2%). While all segments should report RevPAR increases for 2018, the lowest rate of RevPAR growth is projected in the Upper Midscale segment (+1.7%).

Twenty-three of the Top 25 Markets are projected to report RevPAR growth for the year. While most markets are projected in the 0% to +5.0% range, five are expected to see growth in the range of +5% and +10%: Chicago, Illinois; Miami/Hialeah, Florida; Minneapolis/St. Paul, Minnesota-Wisconsin; Philadelphia, Pennsylvania-New Jersey; and San Francisco/San Mateo, California. The two markets expected to show a decrease in RevPAR, each between -5% and 0%, are Houston, Texas, and Washington, D.C.-Maryland-Virginia.


For 2019, STR and Tourism Economics project the U.S. hotel industry to report a 0.1% increase in occupancy to 66.2%, a 2.3% lift in ADR to US$133.04 and a 2.4% rise in RevPAR to US$88.07.

The highest overall rate of RevPAR growth (+2.3%) is expected in the Luxury, Midscale and Independent segments, while the lowest (+1.9%) is projected among Upscale and Upper Midscale chains.

Different from 2018, Minneapolis is the lone Top 25 Market projected to report a negative RevPAR percent change for the year—this is due largely to the difficult-to-match comparison with the Super Bowl year. The remaining 24 markets are expected to post growth between 0% and 5%.

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