First Half Hotel Performance ‘Better Than Expected’

North American hotels continue to experience significant growth, with average daily rates up 2.7 percent and bookings up 1.4 percent compared to the first quarter, reported TravelClick, New York.

“Hoteliers in the first half of 2018 experienced consistent rates and steady bookings growth,” said TravelClick Senior Industry Analyst John Hach. He noted the company’s forward-looking data predicts the third quarter will be just as promising. “It will offer the strongest level of organic growth that North American hoteliers have seen in recent years, which is welcomed news to hoteliers across the industry,” he said.

Hach cited group travel as particularly strong so far this quarter, up 3 percent in ADR, 4 percent in bookings and a notable 7.2 percent in revenue per available room. Looking ahead to bookings already made for hotel room nights through April 2019, individual (as opposed to group) bookings are up 2.9 percent year-over-year and ADR is up 2.8 percent, he said.

CBRE Hotels, Atlanta, raised its U.S. lodging forecast based on “better than expected” first quarter performance. The firm now forecasts a 2.8 percent annual increase in RevPAR for U.S. hotels this year, 30 basis points better than it predicted in March.

“We continue to be impressed by the ability of the U.S. economy to support demand growth for accommodations away from home,” said CBRE Hotels Senior Managing Director R. Mark Woodworth. He noted first quarter lodging demand grew at 3 percent, 1.1 percentage points greater than anticipated, largely due to an expanding economy. “This sustains 33 consecutive quarters of demand growth, a streak that started in the first quarter of 2010,” he said.

Given the recent strong performance, CBRE said its 2018 annual forecast for lodging demand growth increased from 1.8 percent in its March forecast to 2.1 percent currently. With national lodging supply expected to grow by 2.0 percent this year, this flips the occupancy projection from a 0.1 percent decline to a 0.1 percent increase.

“Looking toward 2019, we foresee another year of occupancy growth,” Woodworth said. “This will mark 10 consecutive years of increases in occupancy and five consecutive years of record occupancy levels.”

Woodworth said he was “bullish” on U.S. hotel performance. “The continual achievement of record occupancy levels, combined with improved ADR growth, should provide all industry participants with a sense of comfort. The magnitude of revenue and profit growth may not be spectacular, but it appears to be very sustainable,” he said.