THE 2019 OUTLOOK for the U.S. hotel industry is just a little dimmer as the STR forecast shows slowing growth. The outlook for 2020 may be slightly worse, with an increasing chance of recession.
Occupancy growth is expected to stay flat this year, rising 1.9 percent again to 66.2 percent. ADR is expected to rise 2.3 percent to $132.81 and RevPAR will see a similar 2.3 percent rise to $87.94. In the two previous years, RevPAR rose 2.9 percent, the lowest percentage change since 2009.
“Late in 2018, RevPAR growth weakened as strong demand was offset by lower-than-expected ADR growth,” said STR President and CEO Amanda Hite. “Now demand is softening, and although supply growth is stabilized, we expect our first year without an increase in occupancy since 2009. Combine more pressure on occupancy levels with already subdued pricing confidence, concerns over labor costs, a cooling economic environment, and the negative sentiment brought on by the recent government shutdown, and you have a recipe for diminished RevPAR growth. Performance growth of any rate will still take the industry to another record-breaking level nationally, but plenty of individual markets and hotels are feeling the slowdown on their bottom line.”
The midscale segment is the only chain scale likely to report an increase in occupancy, albeit just 0.1 percent. Luxury hotels should see the highest increase in ADR, 2.5 percent, and RevPAR, 2.3 percent. RevPAR should increase across all segments this year, but upper midscale will see the lowest growth, 1.7 percent.
STR and its partner Tourism Economics project a 0.2 percent decrease in occupancy in 2020 to 66.1 percent, the first decline in U.S. occupancy since 2009. ADR should rise 2.2 percent lift in ADR to $135.68 and RevPAR should rise 1.9 percent to $89.65.
RevPAR will grow highest in the luxury segment again, up 2.1 percent, and midscale will see the lowest growth, 1.4 percent.
While acknowledging that 2020 is far away, STR Senior Vice President of Global Business Development and Marketing Vail Ross told hoteliers at the Americas Lodging Investment Summit this week that there could be more than a slowdown in two years.
“We are also projecting about a 40 percent chance of recession in 2020,” she said. “That doesn’t necessarily mean that we’re going to have one, but it is a higher chance than what we’re seeing in 2019.”
Last week, STR released its sixth annual Hotel Lender Survey that found 33 percent think hotel values will decrease this year.