STR revised hotel outlook shows flat occupancy

LOS ANGELES — STR revised its 2019 forecast for U.S. hotels,
slightly downgrading expected growth in demand, occupancy, average daily rate and
revenue per available room. 

STR projects that both supply and demand will increase 1.9%,
while occupancy will be stagnant at 0% growth. ADR and RevPAR each are expected
to each climb 2.3%.

“During the recovery, from 2010 to the end of 2018, we
had room demand outgrow supply for the consecutive period,” STR senior
vice president of global business development and marketing Vail Ross said at
the Americas Lodging Investment Summit here. “We’ve never had it go that
long. But in 2019, that will change. Our forecast is not seeing demand drop
significantly, but with that said, we don’t see it growing faster than supply,
and that in turn will cause occupancy not to grow.”

The group’s previous forecast for 2019 predicted supply and
demand growth of 1.9% and 2%, respectively. Occupancy was originally predicted
to inch up 0.1%, while ADR was expected to jump 2.3% and RevPAR 2.4%.

Ross said that STR doesn’t foresee any dramatic shifts in
industrywide performance, due in part to a relatively stable GDP growth
outlook. Still, with occupancy softening, ADR growth could slow.  

“ADR is the wildcard,” said Ross. “Right now,
with consumer confidence still being strong, unemployment low and corporate
profits continuing to grow, there aren’t indicators that there will necessarily
be a dip or lag in ADR growth. But in 2015 and 2016, when supply, demand and
occupancy components were prime for driving rate, we didn’t see it to the
extent that we thought. Out of all of [the predictions], if there’s one that
could impact the RevPAR forecast, it’s ADR.”

RevPAR increased 2.9% in both 2018 and 2017, with that
growth level marking the lowest RevPAR percentage change for the U.S. market in
roughly eight years.

For 2020, STR predicts that supply will increase 1.9% and
demand grow 1.7%, while occupancy is projected to slip 0.2%. ADR is expected to
rise 2.2% and RevPAR 1.9%. Occupancy in the U.S. has not declined year over
year since 2009. 

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