STR ONCE AGAIN lowered its U.S. hotel performance forecast for the next two years and now predicts RevPAR growth for 2019 and 2020 to fall to under 1 percent. Analysts point to a lack of pricing confidence as the primary cause of the forecast revisions.
STR and partner Tourism Economics forecast a 0.8 percent RevPAR growth to $86.68 in 2019 and a 0.5 percent RevPAR growth to $87.10 in 2020.
Occupancy is forecast to down 0.2 percent to 66 percent in 2019 and 0.4 percent to 65.7 percent in 2020. ADR is to up 1 percent to $131.29 in 2019 and up 0.9 percent to $132.50 in 2020.
“U.S. hotels have posted nine straight years with RevPAR increases of basically 3 percent or higher, so growth levels below 1 percent will clearly represent one of the industry’s worst years since the recession,” said STR President Amanda Hite.
The previous version of the U.S. hotel forecast released in August called for RevPAR increases of 1.6 percent and 1.1 percent, respectively.
“At the risk of sounding like a broken record, the major factor in our revisions continues to be a lack of pricing confidence,” Hite said. “Supply growth is coming in ahead of demand growth a bit sooner than expected, so occupancy levels are slightly lower than projected. The major difference is with ADR, where we downgraded by 80 basis points for 2019 and 60 basis points for 2020. ADR has grown below the level of inflation for five consecutive quarters.”
At the same time, Hite predicts demand will continue to grow and exceed record levels.
“Domestic travel continues to increase with forward-looking domestic air bookings remaining strong. Vacation intentions are also holding above last year’s levels,” she said. “The trend that is not as positive, that could negatively affect demand, are the mixed results we’re seeing in overseas arrivals.”
Other forecasts for 2019 are for a decline in RevPAR in 14 of the top 25 markets. However, Atlanta, Denver, Phoenix and San Francisco are expected to post an increase of 3 percent or higher.
Economy and independent segments are likely to report the only occupancy increases while independents are projected to report the highest jump in RevPAR.
In 2020, STR and Tourism Economics predict the highest RevPAR in the luxury segment and upscale is expected to see the steepest decline.