THE U.S. HOTEL industry is expected to see strong performance through 2019, but slightly less than this year, according to STR and Tourism Economics. Part of the reason for the dip is the fact that last year’s hurricane demand boost will finally fade out in the fourth quarter of 2018.
Supply for 2018 is expected to grow 2 percent by the end of the year while demand is projected to grow 2.4 percent, according to STR and Tourism Economics’ revised forecast released at the NYU International Hospitality Industry Investment Conference last month. Occupancy will end the year growing 0.4 percent to 66.2 percent, ADR will rise 2.5 percent to $129.74 and RevPAR will go up 2.9 percent to $85.89.
“RevPAR growth exceeded expectations during the first quarter of the year and lifted our projections for 2018 as a whole,” said STR’s president and CEO Amanda Hite. “However, because of the post-hurricane demand boost in 2017, we expect year-over-year occupancy declines during Q4 that will extend into 2019 with that year’s total overall performance affected.”
For 2019, the forecast projects a 1.9 percent rise in supply with a 2 percent increase in demand. Occupancy is expected to increase 0.1 percent to 66.2 percent, with a 2.3 percent lift in ADR to $132.74 and a 2.4 percent rise in RevPAR to $87.93.
“Industry fundamentals continue at record levels supported by strong demand from both the business and leisure sectors. Solid economic indicators and a room construction total that represents just 3.6 percent of existing supply certainly help marketplace conditions as well,” Hite said.
The luxury chain scale is expected to see the largest increases in performance this year, with occupancy rising 0.9 percent, ADR going up 2.9 percent and RevPAR increasing 3.8 percent. Upper upscale is projected to top the RevPAR growth in 2019 with a 2.3 percent increase, while the lowest is projected among upscale (up 1.9 percent) and midscale (up 1.9 percent).