NASHVILLE, Tennessee— The U.S. resort segment is outpacing the rest of the hotel industry in its climb back to previous peaks in average daily rate, according to Lindsay Culbreath, director of sales at STR.
One factor contributing to the resort segment’s rate recovery is its almost nonexistent supply growth, Culbreath said. The resort market—which makes up 12.3% of total supply in the U.S. with 3,819 properties comprising 601,752 rooms—has only seen a 0.1% increase in supply year to date July, she said during a presentation at this year’s Hotel Data Conference titled “Rallying resort markets: How top leisure destinations are rebounding from the fall.”
In addition to strong spikes in average daily rate, the resort segment has posted consistent growth in occupancy and revenue per available room. Year to date August, resorts saw a 2.7% increase in occupancy; a 3.3% increase in ADR; and 6.1% growth in revenue per available room, .
The segment has experienced 29 consecutive months of positive growth in all three metrics through July, Culbreath said, when speaking at the conference in early September.
That growth trajectory is not atypical for the segment. Taking a look at previous economic cycles, Culbreath said each decline and rebound showed a similar pattern.
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“In July of 2009, resort demand was down 8.2%, and in April of 2002, demand was down 7.3%,” she said. “What is interesting is both of these have a very similar decline and rebound pattern, and both rebounded with 5.7% rebound.”
Culbreath added urban and resort hotels had the highest growth and absolute ADRs. For year-to-date August, urban hotels had average ADR of $148.74 and resort hotels had an average ADR of $144.81.
Transient demand driving recovery
Transient demand is fueling the resort segment’s ADR recovery, Culbreath said.
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“Transient demand has surpassed prior peaks,” she said. “(2012) is selling 1 million more rooms than their peaks of 2007 and 2008.”
But transient rates are not quite back to peak levels. According to year-to-date July STR data, transient ADR in resort markets was $154. In 2007 and 2008, transient ADR was at $156 and $157, respectively. STR is the parent company of HotelNewsNow.com.
Culbreath said that transient ADR growth hopefully will aid group rates in 2012 and 2013. Group demand is still well below 2007 and 2008 levels.
“September through November is really the conference season, so you’ll see that increase,” Culbreath said.
Key resort markets
A majority of the U.S. resort markets were between 80% and 100% recovered as of early September, Culbreath said.
“Miami and the (Florida) Keys have increased the most in the key metrics,” she added.
Of the major resort markets in Florida, Miami saw the highest ADR change with an 8.4% increase to $235, while the Florida Keys showed a 7.3% increase to $222 year-to-date July.
Resort markets in California showed mixed results in terms of occupancy and ADR change. Sacramento had the lowest increases with a. 1.4% gain in occupancy and a 0.6% bump in ADR year-to-date July. The Riverside-San Bernardino market had the highest ADR change with a 5.6% increase.
Oahu posted the largest ADR increase (+11.1%) in Hawaii, while the Maui and Kauai markets posted the largest absolute ADRs ($264 and $200, respectively).
And average ADR for the Colorado ($235) and Utah Area ($232) markets are well above the total U.S. resorts average of $145, Culbreath said.