by Michael J. Shapiro | September 07, 2016

Lodging-data providers STR and Tourism Economics have issued a revised U.S. hotel forecast calling for continued performance growth but at a slower rate than previously expected. The companies released their joint forecast at the 2016 Hotel Data Conference in Nashville. 

Hotels in the U.S. are predicted to report flat occupancy this year, remaining at 65.5 percent, along with a 3.2 percent rise in average daily rate, to $124.12, and a 3.2 percent rise in revenue per available room. The previous forecast, issued in June, called for steeper increases in occupancy (up 0.4 percent), ADR (up 4 percent) and RevPAR (up 4.4 percent).

"Rate will be the driver of RevPAR growth this year," said Amanda Hite, STR's president and CEO, at the conference. Despite the occupancy flattening out, however, she stressed that business is still good for hotels. "We're selling more rooms than ever before, we're setting records, we're not forecasting a recession." 

The study predicts the independent segment will see the highest gains in occupancy (up 0.4 percent) and RevPAR (up 3.6 percent), whereas the independent and economy segments should see the highest ADR hikes (both up 3.3 percent).

Fifteen of the top 25 markets are expected to report RevPAR gains of 5 percent or less, while six should see growth in the 5 to 10 percent range. On the negative side, three markets are expected to experience RevPAR drops of 5 percent or less. Houston is the only market expected to drop between 5 and 10 percent.

Looking ahead to 2017, the forecast calls for a slight drop in occupancy (down 0.3 percent) but continued increases in ADR (up 3.1 percent) and RevPAR (up 2.8 percent). Significantly, the forecast predicts that supply growth will outpace demand growth (2 percent vs. 1.6 percent) for the first time since 2009. Every top 25 market with the exception of Houston should enjoy flat to growing RevPAR, according to the forecast.