As part of our year-in-review coverage, HotelNewsNow.com from 21-30 December will revisit and update the most-read articles from the site’s most popular categories. Today’s entry looks back at the 23 May article “8 trends shaping the US hotel recovery,” which was the year’s most-read article from the Research category.
HENDERSONVILLE, Tennessee—A lot has changed since STR’s Bobby Bowers first outlined the state of the U.S. hotel industry recovery for HotelNewsNow.com back in May. The Arab Spring reached its full awakening, the U.S. stock markets endured a rollercoaster ride during August and the European debt crisis reached full tilt.
But if there remains one constant during the past seven months, it’s been U.S. hotel performance.
“It’s been a whole lot stronger than I think a lot of people thought,” said Bowers, who serves as the senior VP of research for the Hendersonville, Tennessee-based research company.
What follows is a quick update for each of the topics Bowers touched upon for “8 trends shaping the US hotel recovery.”
Demand
Hotel demand in November is as strong as it’s been all year, Bowers said. Through the end of the month, there was a 5.1% increase in rooms sold compared to 2010, according to data from STR.
But as we move into 2012, demand is going to be one of the key indicators Bowers will be watching closely.
STR recently revised downward its demand forecast to 1.1% growth during 2012.
Chain-scale price premiums
With a downturn comes downward compression as the high end of the market begins to discount and cut rates.
Bowers in May noted the luxury segment had begun to reverse that trend in the early stages of recovery. For the year-end 2011, the chain scale is projected to have the largest increases in both average daily rate (6.1%) and revenue per available room (11.3%).
The rest of the chain scales are showing steady improvements in the three key performance metrics, with the lone exception being the midscale segment, which is expected to finish the year with a 0.9% decrease in ADR.
Transient vs. group
Unfortunately, not much has changed for the group segment. “They’re not quite back to the pre-downturn levels that you had in 2007,” Bowers said. “It’s getting close, but it’s not back.”
The reason? Group rates were booked during the downturn, and it will take a while before they cycle out, he said.
The transient segment, on the other hand, is “back and then some” from its 2007 peaks, Bowers said.
Recovery drivers
Whereas previously Bowers focused on corporate demand as one of the major drivers of recovery, he’s currently more focused on macroeconomic indicators that could impede progress in the hotel sector.
Employment and consumer confidence were among several metrics he listed, as well as the shaky economic landscape in Europe and the U.K., specifically.
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‘Haves’ and ‘have nots’
The U.S. hotel industry landscape still is bifurcated, but exceptions have emerged, Bowers said. Previous powerhouses such as New York and Washington, D.C., have since slowed, while secondary players like Pittsburgh and Detroit are coming on strong.
Gas prices
There was a lot of talk about the impact of gas prices before the summer travel season, but most of those concerns have died down, Bowers said.
“If you look at them, that’s not as much of an issue as it was,” he said, adding gas price is always subject to fluctuation.
Supply growth
Not much has changed in the U.S. hotel pipeline. Projects under construction stand at approximately 55,000, which represents the bottom of the building cycle, Bowers said.
The next few years will see a very slight uptick, with a 0.9% projected increased in the number of rooms entering the market during 2012, according to STR.
The upper-midscale (16,325 rooms) and upscale segments (16,140 rooms) had the most rooms under construction as of November. The economy segment (878 rooms) had the fewest number of rooms under construction.
Forecast
STR’s revised forecast reflects the continuing volatility in the global economic landscape, Bowers said.
