Hotel Sector Forecast Downgraded

The hotel sector reported positive results in all three key performance metrics during May, but several analysts downgraded their 12-month forecasts.

Data firm STR, Hendersonville, Tenn., said hotel occupancy rose 0.9 percent year-over-year to 68.7 percent, average daily rates rose 1.6 percent to $132 and revenue per available room increased 2.5 percent to $91 during May.

“The industry sold three million more room nights [in May] than last May and continued the trend of monthly performance records with modest year-over-year growth,” said STR Senior Vice President of Lodging Insights Jan Freitag. “While we did downgrade our forecast for 2019 as a whole, we are expecting solid performance for the summer months with U.S. air travel bookings and vacation intentions on the incline.”

The industry has posted year-over-year RevPAR growth for 110 of the past 111 months, STR said. The longest overall expansion cycle in industry history lasted 112 months from 1991 through 2001.

Looking ahead to confirmed bookings through April 2020, TravelClick, New York, said hotel average daily rate performance could offset “stagnant” occupancy levels in most North American hotel markets. Transient bookings are down 4.4 percent year-over-year while projected ADRs are up 1.9 percent, the company’s North American Hospitality Review said.

“While the 12-month occupancy outlook continues to trend down, there are a number of key metrics showing signs of stability and consistency,” said TravelClick Senior Industry Analyst John Hach. “These early indicators lessen some concern over declining occupancy and offers positive news for North American hoteliers.”

Hach cited industry concerns about overall 2019 demand, “particularly within the leisure travel segment throughout the second and third quarters,” he said. “There is heightened need to continually offer competitive pricing while investing in demand generation initiatives to capture and convert travelers looking for accommodations during the peak summer travel season.”