HENDERSONVILLE, Tennessee—As the summer season comes to a close, many travelers have recently cashed in vacation time or plan to in the coming weeks. Because a significant amount of resort business comes from leisure travel and considering the current performance of resorts—one of STR’s six location types—it’s safe to say resorts saw plenty of traffic recently.
STR, parent company of HotelNewsNow.com, defines resorts as hotels located in a U.S. resort area where the primary source of business is leisure-destination travel. There are nearly 4,000 of these properties in the U.S.
It’s no surprise that resort markets took a big hit during this past recession when it was publicly frowned upon to conduct meetings at these properties. Starting in June 2008, the resort segment saw 21 consecutive months of declining revenue per available room. At its lowest point, in March 2009, year-over-year RevPAR was down 26.8%, which is not far from its most severe decline of 27.3%, which resorts experienced in September 2001.
Breaking the data down by segmentation (group, contract and transient), we’re able to tell that transient demand held relatively steady throughout the downturn and has continued to surpass peak levels each year. However, the group and contract segments were not as lucky as they suffered severely in both occupancy and average daily rate. However, the resort segment is recovering, having seen 28 consecutive months of positive growth. And it looks like that trend will continue.
With the first half of 2012 behind us, data shows June year-to-date occupancy for resorts is 64.5%, ADR is $145.70 and RevPAR is $93.91. Compared to the other location types, resorts didn’t have the strongest year-to-date occupancy, growing only 2.9%, but ADR was up 5.1%—beating out all of the other segments—ultimately giving resorts an 8.1% RevPAR increase.
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One of the factors contributing to the positive growth is the relatively nonexistent new supply. The resort segment ended 2011 with 0.2% supply growth and year-to-date 2012 there has only 0.1% growth, which is the lowest among all of the location types. Combine that with the year-to-date demand growth of 3%, and those are strong performance indicators across the board.
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Because there are a lot of factors that contribute to an individual hotel or a market’s performance, it should be no surprise that some of the resort destinations have been slower to recover while others were able to rebound more quickly.
For an in depth look at the performance of specific resort markets, there will be a breakout session titled “Rallying resort markets: How top leisure destinations are rebounding from the fall” during the fourth annual Hotel Data Conference on 5-6 September at the Loews Vanderbilt Hotel in Nashville, Tennessee.