TravelClick forecasts reduced discounting in the face of strong hotel performance

Data from the September 2014 TravelClick North American Hospitality Review (NAHR) shows that hotels in major North American markets are showing growth in rate and occupancy across all segments. This is making way for higher revenue per available room (RevPAR) as hotels are able to reduce transient discounting.

“We’re starting to see an emerging trend toward the reduction of transient discounting for RevPAR improvement,” said John Hach, SVP, global product management of TravelClick. “When demand is strong and sustainable, savvy hoteliers actively manage to minimize discounts for increased RevPAR performance. We anticipate this trend to continue, especially in markets experiencing strong group advance reservation volume. Ultimately, hoteliers are setup to generate more revenue for the remainder of this year into 2015.”

For the next 12 months (September 2014 – August 2015), TravelClick shows overall committed occupancy has risen 4.4 percent compared to the same period last year. Additionally, ADR is up 4.1 percent based on reservations currently on the books and transient bookings are on the rise, up 6.9 percent year-over-year. ADR for transient bookings also rose 5.1 percent.

All in all, the transient segment is showing occupancy gains of 6.6 percent and ADR gains of 5.3 percent. Both negotiated and retail transient business segment occupancy is up 7.3 percent, and ADR is up 5 percent. Occupancy in the group segment is also strong, showing gains of3.3 percent while ADR for the segment is up 1.8 percent compared to the same period last year.

In the report, Hach says the group segment stands out in Q3, particularly regarding the growth of group bookings in September. "It will be interesting to see if this segment growth becomes a positive trend or if it will flatten out over time," Hach said. "Regardless, September is netting out to be an extremely strong month across the board, hoteliers are on track to experience a 14 percent increase in RevPAR. We expect to see this momentum positively impact the majority of key markets throughout North America.”

In late August, STR Global released a report that showed ADR increased in July across all four global regions year over year. In the Americas alone ADR increased 4.8 percent year over year to $119.81, while occupancy rose 3.6 percent to 73.2 percent, according to Business Travel News. ADR in Europe increased 5.9 percent in July and occupancy was up 1 percent.

There is more optimism to come as PKF Hospitality Research predicted record hotel occupancy for the U.S. hotel industry in 2015, with an expected rise of 65 percent on the way. If true, this will be the highest national occupancy rate since STR began covering the metric in 1987, according to Successful Meetings.

By the end of 2015, PKF expects demand for lodging to have increased 25.8 percent since the bottom of the 2009 recession, while hotel supply growth will only reach 5.6 percent. Additionally, PKF expects an annual increase in ADR of 5.7 percent from 2017 through 2017.