HENDERSONVILLE, Tennessee—With much of the nation talking about macroeconomic volatility, a potential double-dip recession, the European Union, and other speed bumps looming over the horizon, it can be helpful to examine the recent reality embedded within the performance data.
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Brad Garner
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Fortunately, the recent past for the U.S. hotel industry paints a picture of steady recovery in room demand, which increased 4.2% during June, July and August.
In fact, the summer travel season was stronger than we expected. STR’s initial forecast for the three-month period, which we published in April, projected only a 2.5% gain in hotel demand. But as U.S. consumers continued to exercise their summer vacation birthright and corporations, armed with flush balance sheets and healthy profits, increased their travel budgets in earnest, demand for hotel rooms swelled to record-setting levels.
Make that three separate record-setting heights. June, July and August each set individual records in their respective months for the most roomnights sold in the history of the U.S. hotel industry. July set the single highest monthly tally ever with more than 105 million roomnights sold—a 3.5% increase over July 2010.
U.S. hotel roomnights sold
| |
2011 |
Previous peak (year) |
| June |
98,783,203 |
96,211,801 (2007) |
| July |
105,616,919 |
101,997,918 (2010) |
| August |
100,100,358 |
97,474,419 (2007) |
Source: STR
Overall, the industry ended the season with a 3.5% increase in occupancy to 67.9%, a 3.7% rise in average daily rate to US$102.50, and an over 7% jump in revenue per available room to US$69.57.
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Occupancy and RevPAR growth exceeded our initial expectations, surpassing our forecasts of 1.7% and 5.9%, respectively.
And while average daily rate grew in line with our initial forecast of 4.1%, pricing leverage still remained elusive as the macroeconomic environment struggled to find its footing.
Room revenue for the summer travel season increased 8.1% to US$31.2 billion.
U.S. summer hotel performance (in year-over-year percent change)
| Year |
Occupancy |
% change |
ADR |
% change |
RevPAR |
% change |
| 2010 (actual) |
65.6% |
6.7% |
US$98.89 |
1.3% |
US$64.82 |
8.1% |
| 2011 (forecast) |
66.7% |
1.7% |
US$103.01 |
4.1% |
US$68.68 |
5.9% |
| 2011 (actual) |
67.9% |
3.5% |
US$102.50 |
3.7% |
US$69.57 |
7.3% |
Source: STR
The reality of the data to this point tells us:
• As yet, there has been no degradation of roomnight demand;
• solid results were posted for the industry this summer;
• preliminary results for the month of September are strong;
• rate growth (ADR) is meaningful but not at the pace of increase we, the industry, had hoped for; and
• New York/Wall Street performance or rhetoric is not indicative of industry-wide performance/results.
For now, the performance data suggests the light at the end of the tunnel has not dimmed. We will review our 2011/2012 forecasts at the end of October. Stay tuned.
