State of the hotel industry: It’s an individual market game

By April 4, 2017Blog
State of the hotel industry

Individual hotel success is increasingly becoming a game of the haves and have nots. We recently attended the annual Hunter Hotel Conference to get our springtime check-in on industry numbers, and it’s become clear 2017 is about individual market dynamics.

Yes, STR is predicting the U.S. hotel business to see ADR increases of 2.8% this year and 2.8% next year, which helps increase RevPAR 2.5% and 2.6% in 2017 and 2018. But to fully understand the truth behind the headlines, we must get granular.

In Europe, for example, it’s the same scenario of predicted ADR growth. Turkey is having serious issues which is benefiting regions such as Spain, while France is finally bouncing back.

Mark Woodworth, President of PKF Hospitality Research, a CBRE company, characterized the overall market as “Bright Horizons, dusty dawns.” He’s saying not all markets are created equal, and he’s right. In fact, there’s a massive market disparity making the numbers in the above paragraph irrelevant for individual hoteliers.

Here’s why: In 2016, Los Angeles/Long Beach, CA enjoyed an average occupancy of 81.3%, which drove ADR up 8.5%. Nashville, TN saw occupancy at 74.8% with an ADR increase of 6.0%, according to STR. These are especially impressive numbers after 84 months of solid hotel industry gains. However, Miami and Houston had occupancies with 75.9% and 62.3% but saw ADR tumble -2.9% and -3.6%, respectively.

Nationwide, Jan Frietag, SVP at STR, said hotel occupancy is on the decline in 2017, albeit slightly. Expect a -0.3% in 2017 and -0.2% in 2018, predicts STR. To ensure your property is not only filling rooms, but filling them at the best possible rate every night, focus attention your market’s specific demand drivers.

Tip: Understand there are many significant demand drivers not readily seen.

Fortunately, recent leaps in technology reveal the previously invisible, helping help hoteliers in strong, weak and middling markets outperform their perceived competition.

To learn more about how new data insights can boost the bottom line of your hotel, connect with us here at LodgIQ

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