US hotel industry in the pink despite slight slip in occupancy rates

US hotel industry in the pink despite slight slip in occupancy rates

US hotel industry in the pink despite slight slip in occupancy rates Data from STR Global, a hotel benchmarking firm, reflected mixed results from the hotel industry for the month of July year on year, but figures indicate a healthy industry position.

STR said in a recent report that occupancy dipped 1% to 74.4% overall but average daily rate (ADR) for July went up 3.6% to around $129, while revenue per available room (RevPAR) rose 2.5% to $96.

"July supply growth crept up 1.6%, and demand growth slowed to an anemic 0.6%—basically no growth at all," said STR senior vice president for lodging insights Jan Freitag. "Math then dictates that occupancy has to decline by 1%, but luckily, there was a bit of pricing power (ADR +3.6%). This month's occupancy decline is the sharpest this year, but the ADR growth is the highest (tied with February and June)."

Further, Freitag said US RevPAR has sustained its momentum for 77 consecutive months, with this July hitting the highest rate at 117 million room nights.

In the top 25 markets, Philadelphia, Pennsylvania and New Jersey reflected the largest year-over-year increases in each of the three metrics. Occupancy in the market hit 6.2% to 78.6%; ADR increased 30.5% to $159; and RevPAR rose 39% to $125%. The spike in Philadelphia demand was mainly due to its hosting of the Democratic National Convention in the latter part of the month.

In contrast, Houston, Texas, saw the steepest declines across the three key performance metrics. Occupancy in the market slid 13% to 61%; ADR decreased 8.8% to $96; and RevPAR fell 21% to $59.

"The Top 25 Markets are seeing the majority of new supply (+2.1%), so that is where a demand growth slowdown will hit first. Occupancy declined 1.5% in the top markets, and ADR grew only 2.6%. In fact, 15 of the Top 25 Markets registered an occupancy decline. Nowhere was it worse than in Houston where demand dropped 7.9%, and supply increased 5.6%," Freitag concluded.