Q1 results point to strong U.S. hotel market

The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the first quarter of 2017, according to data from STR. 

Compared with Q1 2016, hospitality posted a 0.9-percent rise in occupancy to 61.1 percent. Average daily rate also increased 2.5 percent to $124.27, while revenue per available room rose 3.4 percent to $75.92.

"This was the strongest first quarter on record in each of the performance metrics, but it is important to note that results were boosted by a favorable Easter calendar shift (March 2016 to April 2017) as well as the Presidential Inauguration and Women's March in January," Bobby Bowers, STR's SVP of operations, said in the report. "Supply growth for the quarter was 1.9 percent, which was the highest for any quarter since Q2 2010. So as demand growth becomes more moderate, occupancy will decline, placing further pressure on pricing power. At any rate, muted ADR growth will continue to push modest RevPAR growth for the foreseeable future." 

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Among the top 25 markets, Washington, D.C., Maryland and Virginia saw the quarter's only double-digit increase in RevPAR (up 16.1 percent to $107.93). Growth was driven primarily by the only double-digit rise in ADR (up 13.6 percent to $165.94). Occupancy growth in the market was more moderate (up 2.2 percent to 65.0 percent). 

Other top RevPAR increases were reported in Detroit (up 9.8 percent to 63.20); Seattle (up 9.2 percent to $96.62); and New Orleans (up 8.0 percent to $118.90). 

Washington, D.C., Maryland and Virginia saw the quarter's only double-digit increase in RevPAR.

Top occupancy growth was reported in Norfolk/Virginia Beach, Va. (up 6.2 percent to 50.9 percent); Seattle (up 5.4 percent to 71.4 percent) and Detroit (up 5.4 percent to 62.3 percent). 

Miami/Hialeah, Fla., experienced the steepest decline in RevPAR (down 8.5 percent to $186.36) due to the largest drop in ADR (down 7.5 percent to $227.37). Miami's absolute value for RevPAR was still the highest among the top 25 markets. 

"Demand (rooms sold) was up in Miami, but supply was almost 5 percent higher than the first quarter of last year, placing obvious pressure on occupancy and ADR," Bowers said in the report. 

Even while hosting Super Bowl LI, Houston saw the quarter's largest decrease in occupancy (down 3.2 percent to 63.7 percent).

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