NASHVILLE, Tennessee—Although much emphasis is put on top 25 market performance, 57.4% of United States hotel revenue is generated outside those markets, in regions that comprise 68.7% of the country’s supply, according to Chad Church, senior director of operations at STR, parent company of HotelNewsNow.com.
And from a performance perspective, most of those markets have recovered well, Church said Wednesday during a presentation titled “The best (and worst) of the rest: Beyond the top 25 markets” at the Hotel Data Conference.
“In the non-top 25 markets, you have 58% of the markets above their prior peak (in average daily rate),” Church said.
The top average-daily-rate performer year to July is North Dakota, he said, which is $17.67 higher than its prior peak. The market with the ADR lowest from its peak is Maui Island, Hawaii, which is down more than $21.
In general, however, “when we’re talking about the non-top 25, a large majority had positive (revenue-per-available-room) growth,” Church said.
Breaking down the data from metro and non-metro perspectives, metro markets such as Louisville, Kentucky, and Knoxville, Tennessee, recovered much more quickly from the downturn than non-metro areas such as southern Indiana.
The metro markets reported a 7.5% increase in revenue per available room last year and are up 8% in RevPAR year to July.
“Metro markets fall faster and harder, but they also recover more quickly,” Church said.
Regional performance
Taking a deeper look into the non-top 25 markets in the northeastern U.S., the data shows it is the weakest region, he said.
Although there were no markets in the northeast that reported a negative RevPAR, the year-over-year increases are not as significant in comparison to other U.S. regions.
Year to July, Albany, New York, was the best performing market in the non-top 25 category based on changes in RevPAR. The market reported a 14.9% increase in RevPAR, with occupancy of 10.1%.
The worst performer in the region was the Jersey Shore in New Jersey, which does not include Atlantic City. Its RevPAR was dragged down by a negative ADR, but an increase in occupancy kept RevPAR growth on the positive side, Church said.
The non-top 25 markets in the South reported 2.6% occupancy, 3.4% ADR and 6.1% RevPAR year to July.
The winner in RevPAR growth so far this year is Sarasota-Bradenton, Florida, Church said. The market had a 16.3% year-over-year RevPAR increase, which could be because Sarasota beaches are ranked among the best in media reports.
At the bottom is Lexington, Kentucky, but it’s a bit of a false negative because the horse show that took place in the market in 2011 boosted that year’s performance, Church said. It was down 5.8% in RevPAR year to July.
Moving on to the central U.S., the region’s 9.1% growth in RevPAR was driven heavily by Texas markets, Church said.
West Texas reported a 29.6% growth in RevPAR year to July, he said. “West Texas has benefitted from a robust oil and natural gas industry.”
The Western region of the country is generally positive on the occupancy side so far this year, he said. However, it’s been experiencing slower growth in ADRs.
Oakland, California, is performing extremely well this year, Church said. The market continues to get the overflow from San Francisco, which has been performing well in the top 25.
Albuquerque, New Mexico, which is down 1% in RevPAR, up 2% in ADR and down 3% in occupancy took the spot for the worst performing non-top 25 market in the Western U.S.
Demand opportunities
To sum up, Church said the Central region is leading the 2012 recovery rate as oil and natural gas drilling continue to drive performance while the Northeast lags.
Demand opportunities lie in the group segment for most markets, he said. “In many top areas, business development drives hotel demand.”
Moving forward, RevPAR growth will be more dependent on ADR growth, he said. “A lot of these markets are doing a healthy, robust job at building up their demand numbers, and now their ADR is going to follow.”
