NASHVILLE — Numbers don’t lie—and that’s a good thing for the hotel industry’s foreseeable future, according to speakers at this year’s Hotel Data Conference here. In particular, 2014 has been a banner year, largely thanks to what STR president and COO Amanda Hite called “the incredibly high demand numbers” the industry saw in the first half of the year.
For example, STR VP Vail Brown cited June’s occupancy level of 71.7 percent, or “the highest June occupancy this century,” she said, driven largely by transient demand, though steadily increasing group demand has contributed to the overall picture.
“Group didn’t recover as quickly as we thought it would, then it all of a sudden picked back up,” Brown said. “In June [the industry] sold 1.5 million more group rooms than it sold in June of 2013 and we’re finally in the positive.”
This demand boom, coupled with still relatively low supply growth, factored into STR and PKF Hospitality Research’s revised forecasts for the remainder of 2014 and 2015.
To close out 2014, STR revised its supply forecast down from 1.2-percent change to 1-percent change, and increased the demand forecast from 2.6 percent to 3.6-percent change. PKF, which will officially release its revised forecast shortly, gave a sneak peek of supply closing out the year at 0.9-percent change and demand up 3.7 percent.
UP AND AWAY
Rate is another metric on the way up. STR forecasts year-over-year average daily rate growth of 4.2 percent this year, while PKF has ADR up 4.5 percent to close out 2014. That ADR number represents “good, solid rate growth,” according to Hite. “We’re looking at a good 36 months of strong demand, RevPAR and rate growth, with opportunity for even more rate growth,” she said.
PKF-HR’s Director of Research Information Services Robert Mandelbaum agreed. “A year ago we were saying 2017 was when RevPAR would start to slow down, but now we think there’s potentially a three- to four-year window [of steady growth.]”
Group business has been another 2014 success story, according to Hotel Data Conference speakers.
Katie Moro, director of business intelligence for TravelClick, said the company is tracking bookings up three percent year over year, including group and transient. “Positive group growth is always a good thing,” she said. “I think the behavior of group business is very telling of what’s to come.”
Hite concurred, saying STR saw positive growth in the group business segment this year for the first time since 2012—up about two percent over a 12-month moving average and up about four percent for the first few months of 2014.
Part of that might be due to the return of certain types of group business that are coming back for the first time since the recession, Hite said.
In terms of channel distribution, Moro shared that “while OTA year-over-year room night growth continues to grow, still, the direct hotel channels are leading the way as far as occupancy contribution.”
She advised hoteliers to look at those numbers and make sure direct booking channels are performing at their best. “A lot of your business is coming from brand.com,” she said. “How are your websites functioning to make sure you’re taking advantage of the fact that people are buying online?”