U.S. Hotel Industry to Continue Growth Through 2017

The U.S. hotel industry should continue to experience steady year-over-year growth at least through 2017, according to the first 2016 forecast from STR and Tourism Economics. The report predicts a slight 0.6 percent rise in occupancy this year, for a 65.9 percent year-end average occupancy. Average daily rate is expected to climb by 4.4 percent, to $125.30, and revenue per available room to increase by 5 percent, to $82.60. Demand growth is expected to outpace supply growth once again, at 2.3 percent vs. 1.7 percent, respectively.

"We are projecting healthy RevPAR growth in 2016," noted Jan Freitag, STR senior VP for lodging insights, "and RevPAR will continue to be driven by room rate." Freitag pointed out that the forecasted 4.4 percent rise in rate is the same that was achieved in 2015. "At the same time, industry occupancy is at an all-time high. Even a small year-over-year increase will lead us to another record year for occupancy," he added.

The upper upscale segment is projected to get the sharpest increases in both average daily rate (4.6 percent) and RevPAR (5.2 percent).

Looking further ahead, the report projects a 0.2 percent year-over-year rise in occupancy for 2017, along with a 4.3 percent hike in ADR and a 4.5 percent increase in RevPAR. Demand growth, which has exceeded supply growth each year since 2010, is expected to continue that trend in 2017, with a 2.1 percent higher demand vs. a 1.9 percent rise in supply.