Last summer, in July 2010, you probably heard a lot of hype about the U.S. hotel industry selling the most hotel roomnights ever, breaking records and setting milestones.
Well that’s true, last July was the first time in history the U.S. hotel industry sold more than 100 million roomnights in a single month, according to data collected by HotelNewsNow.com’s parent company, STR. Cue the confetti and noisemakers.
Not so fast. The fact is, when the industry isn’t caught in one of its cyclical downturns, breaking records for the number of monthly roomnights sold throughout the United States—also known as absolute demand—is a fairly annual occurrence. It happened again in July 2011, when the U.S. hotel industry sold 105,760,239 total hotel rooms, up 3.6% from last July, according to STR. In fact, for 19 of the past 25 years, either July or August has set a record for the most roomnights sold in a single month.
It makes sense—as more American travelers are born, more hotel rooms are built and therefore there are more to buy and fill. But still it’s interesting to take a look at absolute demand numbers and make some inferences. Let’s do just that …
• As noted earlier, in the 25 years since STR has been collecting data on the U.S. hotel industry, 19 of the 25 years a single month has experienced more hotel rooms sold than any single month in history. You can tell a lot about the history of the industry by looking at the years records weren’t broken—1996, 1997, 2001, 2002, 2006, 2007, 2008 and 2009. In 2001, for instance, the beginning of a hospitality downturn is typically blamed on the events of 9/11, but we can tell from this data that a leisure travel slowdown occurred before that event. Similarly, it appears vacationers were already pumping the brakes in 2006 before the great financial collapse of 2007.
• The most hotel rooms are sold during the summer, when Americans are taking vacation. STR COO Brad Garner calls it “when the industry makes hay.” For the past 14 years, more hotel rooms have been sold in July than any other month of the year, dating back to 1997.
• Interestingly, prior to 1997, August typically sold more hotel rooms than July. In fact, from 1987 to 1992, August led all calendar months in absolute demand. Garner attributes the shift in travel popularity from August to July to children starting school earlier in the year. “What used to be a very powerful July and August has transformed into a jumbo July,” he said. “The timing of when school starts could impact this. Americans could be saying, ‘We’re not going to travel in August because the kids are going back.’”
• One contributing factor to absolute hotel demand is the number of weekend days in a month. In 2010 and 2011—both years demand records were set—July had 10 weekend days as opposed to the average nine. Next year, July will only have eight weekend days.
• The biggest year-over-year growth in absolute demand was 8.8%, from July 2009 to July 2010.
• Supply growth is even more predictable. Only one July, in 2006, were there less hotel rooms available (about 40,000) than the year before, according to data collected by STR.
• What really will be a champagne-worthy record is when occupancy for a single month reaches a never-seen-before number. Occupancy in July 2011 was 69.9%, up from 67.9% last year. The previous July high was 70.4% in 2007, and the highest occupancy for July since STR began collecting data was 74.5% in 1994. (In fact, 74.5% in July 1994 was the highest occupancy ever recorded in a single month since STR began collecting data.)
• Garner said selling 7 out of 10 hotel rooms overall in July in the U.S. was “pretty powerful.” “The wave in transient demand lines (which makes up most summer travel) never really fell that far,” he said. “Once we build the group side back in we’ll see an overall robustness in that demand number. That’s why you sure hope that corporations and consumers don’t start tapping on the brakes a little bit.”
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