Updated STR forecasts call for metrics increases12 Sep, 2013
STR updated its U.S. forecasts for year-end 2013 and 2014 this week and is predicting modest gains.
In 2014, STR predicts occupancy to grow 1.3 percent to 63.1 percent, ADR to rise 4.6 percent to $115.73 and RevPAR to grow 6 percent to $72.97. Supply growth will increase in 2014 to 1.1 percent but remains below the long-term average of 1.7 percent.
For 2013, the industry is expected to record a 1.4-percent increase in occupancy to 62.2 percent, an average-daily-rate gain of 4.2 percent to $110.61 and a revenue per available room increase of 5.7 percent to $68.85. Supply and demand are expected to end the year with increases of 0.8 percent and 2.2 percent, respectively.
"The outlook for the U.S. industry is very positive for the next 18 months," said Amanda Hite, president and COO at STR. "The industry will continue with favorable supply and demand conditions that will position the industry to see RevPAR growth driven mainly by ADR."
Among the segments, STR predicts luxury to report the largest increases at year-end 2013, increasing 2.3 percent in occupancy, 5.4 percent in ADR and 7.8 percent in RevPAR.
Among the top markets, three markets are predicted to end 2013 with double-digit RevPAR increases: Houston, Texas; Oahu Island, Hawaii; and San Francisco/San Mateo, California. Washington, D.C., is the only market predicted to report a RevPAR change of flat to a 5 percent decrease.
In addition, occupancy for the top 25 markets has regained its previous peak at 71.1 percent year-to-date July, said Brad Garner, SVP of STR.
The top 25 markets also are almost back to their previous average daily rate peak of $134.24, which was recorded during September 2008, with ADR through July at $132.89 on a 12-month moving average. Garner said the metric has increased steadily at 4.5 percent for the past several months.
There were 389 million room nights sold in the top 25 markets during the 12 months ending July 2013, according to STR data. In addition, 377 million room nights were sold during the 12 months ending July 2012. The top 25 U.S. hotel markets each sold 95,000 fewer rooms on average during July compared to the previous peak.
That gap is decreasing, Garner said: The top 25 markets on average sold 227,000 fewer rooms in 2012 compared to the prior peak, 451,000 fewer rooms in 2011 and 1.25 million fewer rooms in 2010.
ADR is seeing the same trend. On a 12-month moving average through July 2013, the average ADR was $4.54 less than its prior peak, compared with $7.62 less in 2012, $13.20 less in 2011 and $17 less in 2010.
When it comes to supply, the top 25 markets held 31.5 percent of total U.S. supply with 1.54 million rooms year to date through July. The top 25 markets accounted for 43.1 percent of total revenue with $51.6 billion in revenue out of the industry’s total $119.7 billion.
Group occupancy is down 1.9 percent year to date through July, while transient occupancy is up 3.6 percent in the top 25 markets. Revenue per available room is up only 2.4 percent for group, while transient RevPAR is up 8.4 percent. Group demand of 46.5 million through July is approximately 1 million roomnights less than its 2009 peak of 47.6 million.
New York has the most rooms in construction with 11,500 rooms. Philadelphia has the least rooms under construction amid the top 25 markets with only 1,000 rooms. New York also shows the largest percent increase of rooms in construction over existing supply through July 2013 at 10.9 percent. Chicago shows the smallest increase at 1.3 percent.
Houston; Oahu Island, Hawaii; and San Francisco are projected to have the strongest year-end 2013 RevPAR forecasts with between 10 percent and 15 percent growth, according to Garner. RevPAR for Washington, D.C., is expected to finish the year with a decrease between -5 percent and 0 percent.
During 2014, RevPAR for the majority of the top 25 markets is projected to increase between 5 percent and 10 percent, with the exception of Nashville, Tenn., which is expected to post a decrease (-5 percent to 0 percent).Topic : Rates, RevPAR, Occupancy
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