HENDERSONVILLE, TENNESSEE — It was a great year for the U.S. hotel industry last year, according to new data from STR.
Record-breaking performance levels were recorded across the board, with occupancy at 65.9% (+0.9%), average daily rate (ADR) at US$126.72 (+2.1%), and revenue per available room (RevPAR) at $83.57 (+3.0%).
According to STR, the values in these three key performance metrics were each the highest it has ever benchmarked.
The U.S. hotel industry also set records for supply (roughly 1.87 billion room nights available), and demand (roughly 1.23 billion room nights sold). Based on percentage growth for the year, demand (+2.7%) significantly outpaced supply (+1.8%), even though the supply growth figure was the largest for the industry since 2009.
“The industry outperformed projections and reached record-breaking levels across the metrics in 2017,” said Amanda Hite, STR’s president and CEO. “Late-year demand growth, which was no doubt boosted by post-hurricane business in Houston and several major Florida markets, pushed well past a healthy influx of new rooms entering the marketplace. That allowed the industry to end the year well above forecasted levels after seeing more modest rates of growth through the first half of 2017.”
Hite added that given the tax cut and the stronger GDP growth that is expected, U.S. hotels are in solid position moving through the next year.
“Construction activity is on the decline for the first time since 2011, so even as demand growth subsides, the effects on occupancy and rates should be more manageable for hoteliers.”
Among the top 25 markets, Houston, Texas reported the year’s largest spike in RevPAR (+10.5% to $71.97), due primarily to the largest increase in occupancy (+7.1% to 66.7%). The market’s performance was lifted late in the year as the effects of Hurricane Harvey filled hotels with displaced residents, relief workers, insurance adjustors and other hurricane-related demand.
Nashville, Tennessee posted the largest rise in ADR (+6.2% to $142.82) despite a supply-growth-related decline in occupancy (-0.8% to 74.1%).
Orlando, Florida reported the only other double-digit jump in RevPAR (+10.1% to $96.40), due to the second-highest increases in occupancy (+4.9% to 79.3%) and ADR (4.8% to $121.53).
Overall, 18 of the top 25 markets recorded year-over-year RevPAR growth in 2017.