by Michael J. Shapiro | June 20, 2017
United States hotel occupancy was 67.8 percent last month, according to lodging data provider STR. That's not only a 1.5 percent gain over May 2016, it's also the highest May occupancy on record. The nearly 108 million room nights sold is also a record for the month. 
 
"At the same time," added Jan Freitag, STR's senior vice president of lodging insights, "the average daily rate growth (2 percent) was the second-lowest of 2017 and well below the historical average for May, which is 3 percent. Clearly, supply growth hovering close to 2 percent is making hoteliers less confident in their pricing power, even when occupancy performance is positive."
 
STR is projecting that supply growth soon will surpass demand growth, which will eventually lead to decreasing occupancy levels. At that point, U.S. hoteliers will have to rely entirely on average daily rate for their revenue.
 
At this point, however, revenue per available room is still strong; the 3.6 percent year-over-year increase in May, to $85.85, is the 87th consecutive month of RevPAR growth in the U.S. Leading the way were Seattle (up by 11.3 percent), Boston (up by 11.2 percent) and Orlando (up by 10.7 percent). 
 
Boston also had the steepest ADR increase for May, up by 8 percent to $223.63. The steepest decline was felt in San Francisco/San Mateo, which dropped by 6.2 percent to $217.88. The biggest drop in RevPAR was felt in Houston (down by 8.7 percent), while the steepest occupancy decline was (down by 3.9 percent).
 
May's 1.9 percent overall RevPAR growth in the top 25 markets was significantly below that of all other markets (4.7 percent), underscoring the degree to which rapid supply growth is affecting the largest cities.