U.S. hotel performance breaks records, but RevPAR growth stalls in 2019

Atlanta reported the year’s largest lift in ADR (+4.2 percent to $114.54). The city played host to Super Bowl LIII in February. (Photo credit: Pixabay/Paul Brennan)

Performance for the United States hotel industry posted record-breaking levels last year, according to recent data released from STR. However, the hotel data company noted that the industry registered its lowest growth rate in revenue per available room since the current cycle began in 2010.

When comparing the figures over 2018, last year’s U.S. hotel occupancy was flat at 66.1 percent, according to STR. Average daily rate increased 1 percent to $131.21, while RevPAR was up 0.9 percent to $86.76. RevPAR’s growth rate came in well below the long-term historical average of 3.2 percent. However, those absolute values for ADR and RevPAR were the highest that STR has ever benchmarked.

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“With supply and demand growing in equilibrium, ADR is the sole driver of RevPAR gains,” Amanda Hite, STR’s president, said in a news release. “Unfortunately, with ADR rising below the rate of inflation, revenue growth is not keeping up with rising costs, such as increases in wages. That is a concern for owners and operators alike.”

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Year

RevPAR % Change

2009

-16.6%

2010

+5.4%

2011

+8.1%

2012

+6.7%

2013

+5.2%

2014

+8.2%

2015

+6.1%

2016

+3.1%

2017

+2.9%

2018

+2.9%

2019

+0.9%

Source: STR

The industry also set records for supply (more than 1.9 billion roomnights available) and demand (roughly 1.3 billion roomnights sold). Based on percentage growth for the year, supply and demand increased at the same rate of 2 percent.

“Moving forward, we’re not forecasting much of a change from the current 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.”

Market by Market

When looking at the top 25 markets in the U.S., STR data showed that Phoenix saw the highest growth in occupancy (+1.6 percent to 70.7 percent) and RevPAR (+4.5 percent to $94.23) during the year. Meanwhile, Atlanta reported the year’s largest lift in ADR (+4.2 percent to $114.54). The city played host to Super Bowl LIII in February.

Two markets tied for the second-highest increase in occupancy: Denver (+1.3 percent to 73.9 percent) and Tampa/St. Petersburg, Fla. (+1.3 percent to 72.3 percent). Denver also recorded the second-largest uptick in RevPAR, growing 4.3 percent to $100.27.

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As for declines, STR analysts noted that Seattle was affected by supply growth of 5.9 percent. RevPAR in the market decreased 4 percent to $118.86. In terms of the steepest decrease in ADR, Houston fell 3.2 percent to $101.89.

Finally, three markets tied for the largest decrease in occupancy, with the metric falling 2.3 percent for each: San Diego (occupancy of 76.7 percent); Boston (73.9 percent); and Detroit (65.6 percent).

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