Hotel Performance Grows as Pipeline Slows

Major hotel-sector metrics set new records during the second quarter, reported STR, Hendersonville, Tenn.

Hotel occupancy rose 0.5 percent to 69.5 percent, the average daily rate rose 2.2 percent to $127 and revenue per available room increased 2.7 percent to $88.

“The absolute occupancy, ADR and RevPAR levels were the highest for any second quarter on record,” said STR Senior Vice President of Operations Bobby Bowers.

Bowers called the sector’s strong performance especially notable because supply growth was up 1.8 percent for the second quarter in a row. He noted that RevPAR has grown year-over-year for 29 consecutive quarters, but said the second quarter’s 2.7 percent RevPAR growth rate was the second-lowest of any quarter during that streak.

John Hach, Senior Industry Analyst with TravelClick, New York, called average daily rates and bookings “inconsistent” across travel segments–an ongoing trend for the year, he said.

“Accepting unpredictability as the new norm, hoteliers are finding this year’s summer months a bit unusual compared to those in the past,” Hach said. “While ADR for all travel segments is slightly up and bookings are slightly down, there is some indication in the numbers that healthy gains are on the horizon in the coming months.”

Hach said some travel segments are experiencing “noteworthy” signs of growth. Group travel is up 1.3 percent in ADR and non-business leisure bookings are up 2.6 percent.

“Any number of factors could be contributing to this uncertain time–the current economic climate, global events or the continuation of the on-demand/sharing economy,” Hach said.

Bowers said the number of hotel guest rooms under construction slipped 2.5 percent in June to 186,945 rooms in 1,440 projects.

“With May as the exception, we have now seen a decrease in room construction totals in three of the last four months,” Bowers said. “While the month-to-month fluctuations prevent us from definitively calling this a development slowdown, we can certainly point to a significantly lower growth rate year-over-year in identifying such a trend. Regardless, there will still be plenty of construction and planning activity even with occupancy levels heading toward negative territory.”