Hotels Post Record 2019 But See Lowest Growth Since Recession
The hotel sector saw record-breaking performance during 2019 but its lowest growth rate in revenue per available room since the current cycle began in 2010, reported STR, Hendersonville, Tenn.
Hotel revenue per available room increased 0.9 percent during the year to $86.76 and average daily rates increased 1 percent to $131.21. Occupancy remained flat compared with 2018 at 66.1 percent.
STR President Amanda Hite called 2019’s RevPAR and ADR values the highest STR has seen. The industry also set records for supply with more than 1.9 billion room nights available and demand with nearly 1.3 billion room nights sold in 2019. Based on percentage growth for the year, supply and demand increased at the same 2 percent rate.
“The industry turned in another record year in terms of rooms available, rooms sold and rooms revenue,” Hite said. “As was documented throughout 2019, however, RevPAR growth came in lower than any year since the recession and well below the [3.2 percent] long-term historical average.”
Hite noted with supply and demand growing in equilibrium, ADR is the only thing currently driving RevPAR gains. “Unfortunately, with ADR rising below the rate of inflation, revenue growth is not keeping up with rising costs, such as increases in wages,” she said. “That is a concern for owners and operators alike.”
Strong performance in December boosted all three metrics for the year. “The year went out with a bang, so to speak, as December’s RevPAR increase matched February for the highest of 2019,” said STR Senior Vice President of Lodging Insights Jan Freitag. “The overall performance provided a bit of a lift to the total-year numbers but not a significant change overall.”
Among the 25 largest U.S markets, Phoenix saw the highest rise in both occupancy and RevPAR during 2019. Denver and Tampa/St. Petersburg, Fla., tied for the second-highest occupancy increase. Three markets matched for the steepest occupancy decrease: San Diego, Boston and Detroit.
Looking ahead, STR forecasts only minor changes from current hotel performance fundamentals. “Supply growth has remained manageable at the national level, but there is an uneven amount of new inventory in the limited-service sectors as well as certain major markets,” Hite said. “That is where we will see the greatest challenges as the industry embarks on another year of low performance growth levels.”