STR: June RevPAR down, 2019 still on track for 2% growth

The Best Western Plus Executive Residency Phoenix-Happy Valley is the first of 35 dual-branded hotels in Best Western's development pipeline.
Over the top 25 markets, Phoenix saw the highest rises in occupancy and revenue per available room and second highest increase in average daily rate. Photo credit: Getty/miroslav_1

Revenue per available room fell 0.4 percent year-over-year in June to $98.85, marking only the second negative YOY RevPAR comparison in the past 112 months, according to STR. Jan Freitag, the organization’s SVP of lodging insights, said the industry already was on track for flat-to-low growth, but having one less Friday than last year created a further drag.

“The negative figure for the month does not mean the growth cycle has ended,” Freitag said in a statement. “In fact, the industry set a June demand record and achieved the second-highest June occupancy level all-time behind last year. However, healthy enough supply growth and a continued lack of pricing confidence continue to hinder the potential for any meaningful growth.”

September 2018 stands out as the only other month in the past 112 with a negative YOY RevPAR change. STR attributed that month’s decline to difficult-to-match levels from the post-hurricane period the previous year. The industry’s longest overall expansion cycle lasted 112 months from December 1991 to March 2001.

STR also found occupancy dipped 1.3 percent to 73.5 percent and average daily rate rose 0.9 percent to $134.52. Looking ahead, Freitag said STR’s latest forecast predicts RevPAR growth of 2 percent for 2019 and 1.9 percent for 2020.

Some regional highlights from STR’s June report include:

  • Phoenix experienced the highest rise in occupancy (4.2 percent to 65.7 percent) and the second-largest ADR increase (5.1 percent to $98.12) of the top 25 markets, resulting in the largest RevPAR jump (9.5 percent to $64.46).
  • Philadelphia recorded the largest ADR increase (7 percent to $151.07).
  • Detroit experienced the steepest drop in occupancy (-6.7 percent to 72.6 percent).
  • Houston reported the largest drop in ADR (-4 percent to $98.92).
  • Orlando saw the largest RevPAR decrease (-9.8 percent to $94.18)

“The major markets are the best representation of performance consistent with supply growth and little to no pricing confidence,” Freitag said. “As we’ve said, the most noticeable hit is in the select-service classes, where most of the new inventory is concentrated.”