Hotel Rates Rebounding
Following the somewhat sluggish recovery of average daily hotel rates, the U.S. lodging industry is now poised to see stronger growth that will drive revenue, according to hotel data provider STR.
"The developing story line is that industrywide RevPARs will be driven by rate growth over the next two to three years," noted STR president Amanda Hite, with respect to the company's updated forecast. "We anticipate room rates to reach 2008 levels, not factoring for inflation."
Up to now, the lodging industry's revenue recovery has been driven primarily by record levels of demand. For the upper chain scale properties in particular, occupancy levels for the 12 months preceding July 2012 exceeded 70 percent. Occupancy in the luxury, upper upscale and upscale segments are about even with 2007 figures.
While rate growth has been relatively strong, average daily rates do trail 2007 figures in every chain level except for upper midscale. But a look at the year-to-date changes through July reveals that price increases are gaining traction, with the rate of growth eclipsing that of occupancy in every chain scale segment, according to a late-August presentation by STR's business development executive, Lauren Faulkner. The luxury segment leads the way, with a year-to-date rate growth of 4.8 percent and a 3.6 percent growth in occupancy.
STR is forecasting ADR growth of 4.4 percent for 2012, along with a 2.2 percent gain in occupancy and a 6.5 percent increase in RevPAR. For 2013, the company expects occupancy to rise only 0.3 percent, along with a 4.6 percent hike in ADR and 4.9 percent RevPAR growth.