Average Daily Rate Gains Driving North American Hotel Performance
Hotel average daily rate is showing strong growth in 90 percent of the top North American markets, according to reservation provider TravelClick. According to the June 2015 TravelClick North American Hospitality Review, which looks at reservations and group commitments from June 2015 through May 2016, overall rate and occupancy are both up when compared with last year. For the second quarter of 2015, ADR was up 4.4 percent year-over-year; for groups, the average rate was up by 4.2 percent, while transient business rates soared by 5.5 percent. Reserved occupancy for the second quarter was up by 1.3 percent overall, with group occupancy growing by 0.9 percent, transient business by just 0.4 percent and transient leisure leading the way, with a 2.5 percent increase over the second quarter of 2015.
Based on reservations on the books for the third quarter, ADR shows a 4.7 percent year-over-year increase overall, with group rates climbing by 3.5 percent and transient business ADR up by a whopping 7.5 percent. Committed occupancy, which is up by 1.5 percent over last year, is up by 5.4 percent for transient leisure business and 4 percent for transient business. Group occupancy is down slightly (-0.1 percent) from last year.
Group business should turn around soon. "There is an acceleration of group commitments going into the fourth quarter," noted TravelClick senior industry analyst John Hach. "This bodes well for hoteliers finishing out the year on a strong upward pace." Group committed occupancy is up by 1.9 percent for the next 12 months, with a 4.3 percent rise in ADR. Overall committed occupancy for the next year is up by 2.5 percent, with a 4.9 percent ADR hike for reservations already on the books. ADR growth in the transient business segment leads all other segments, with a 6.8 percent gain.