This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.  Find out more here  Close
HDC: Pipeline drought will continue through 2012
August 5 2011

Room supply is not expected to increase for the next three to five years, STR’s Duane Vinson said during the second day of the Hotel Data Conference.

Highlights
  • Development in the luxury sector is down 93.5% from its December 2007 peak.
  • The upper-upscale and upscale chain scales will see the most new rooms during the next three to five years.
  • Demand is relatively strong across all chain scales.

NASHVILLE, Tennessee—The U.S. hotel pipeline drought will continue across chain scales through at least 2012, Duane Vinson, VP client services of STR, said during the second day of the Hotel Data Conference.

For instance, development in the upper-upscale market is down 93.5% from its December 2007 peak of 62,500 rooms to just more than 4,000 rooms, according to data from STR, the parent company of HotelNewsNow.com. And the luxury sector, which hit its peak in 2007 at 15,981 rooms, is down 74% to approximately 4,000 rooms, Vinson said.

“Realistically, we’re not looking for much of an increase in supply for the next three to five years” across the U.S. chain scales, he said.

During the next three years, the upper-upscale and upscale chain scales will see the most new rooms, and even those segments are expected to see only slight year-over-year increases. The supply of upper-upscale rooms is expected to increase to go from 553,000 rooms at end of 2011 to 557,000 at end of 2012 while the supply of upscale rooms is forecasted to grow to 629,000 rooms in 2012 from 611,000 in 2011.

There is, however, some activity lower in the chain scales. Upper midscale rooms comprise 38% of the rooms in construction and 36% of the rooms in the active pipeline, Vinson said. “There are still a lot of active brands,” he said.

And at the lower end of the chain scale, one out of 10 rooms in development is an economy room, he added.

Perhaps not surprisingly, New York has the most rooms in the active pipeline among the top 25 markets with 20,727 rooms. That is more than twice the number of its nearest competitor—Washington, D.C.—which has 9,958 rooms in the active pipeline.

“New York never met a project it didn’t like,” Vinson said.

Chain-scale performance
As far as performance, demand was relatively strong across the chain scales. It is highest at the luxury end of the scale, however, Vinson said. Luxury demand was up by 7.8% year-to-date through June. The lowest demand was in the midscale sector, which saw demand fall by 3.1%.

“Across the board, we are seeing healthy demand growth right now,” he said.

One possible reason for the increase in luxury demand, Vinson theorized, is that more people bought up into luxury as room rates came down. He cautioned that is just a theory, however.

During the second quarter, average daily rate in the luxury segment increased by 6.2% to US$253.83. That was the biggest increase among the chain scale segments.

For 2011 and 2012, luxury is expected to continue to lead the way. In 2011, the segment’s ADR is expected to be up by 6.4% while revenue per available room increases by 10.4%. And in 2012, ADR is forecast to be up by 8.2% and RevPAR should increase by 9.8%, Vinson said. Those are the biggest forecast percentage jumps among the chain scales.

COMMENTS   Show All
Login or enter a name   Post Your Comment  Check to follow this thread via email alerts (must be logged in)
(4000 characters max)

Comments that include links or URLs will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff

TRENDING
Exclusive: Hilton adds Canopy lifestyle brand
A hotelman gives Airbnb a try
Canopy by Hilton: ‘It’s all about mindset’
Data analysis: Ebola impact on hotel industry
The brilliance of Blackstone
Profiling hotel profits: Occupancy or ADR?
VIDEO
The Lodging Conference in review: Day Two
The Lodging Conference in review: Day One
US supply growth not a problem
Low supply, group biz boost hotel sector
HDC attendees discuss revenue strategies
LATEST NEWS
NYC GM exudes calm amid chaos
‘Affordable luxury’ a tricky concept to define
How and when ‘lifestyle’ brands work
Forecasters see continued US prosperity
US hotel renovations list
The Lodging Conference in review: Day Two
Contact Us
Hotel News Now
18500 Lake Rd.
Suite 310
Rocky River, Ohio 44116
        
Copyright © 2004 - 2014 Hotel News Now, a division of STR, Inc. All Rights Reserved.   Privacy