Skip to content

Search

Latest Stories

STR: RevPAR forecast to stay flat in 2020

Other concerns raised at ALIS include a lack of pricing power and less revenue capture

REVPAR IS EXPECTED to remain flat this year and next, according to the forecast for 2020 and 2021 released Tuesday by STR at the Americas Lodging Investment Summit in Los Angeles. STR’s forecast was matched by similar predictions from CBRE Hotels Research and Kalibri Labs.

STR’s revised forecast showed no RevPAR growth in 2020, remaining at $86.73, and 0.5 percent growth to $87.18 in 2021. Occupancy is expected to rise 0.3 percent to 65.9 percent in 2020 and rise 0.1 percent the following year to 65.8 percent. ADR will go up 0.3 percent to $131.63 this year and 0.6 percent to $132.47 in 2021.


“The good news, and kind of the best news of this forecast, is we revised demand up slightly to 1.6 percent,” said Amanda Hite, STR’s president, during her ALIS presentation of the forecast. “We do think the economy is stable. The GDP growth we expect to be at 1.7 in 2020, so there will be demand growth, and that’s demand growth on top of all-time record highs.”

Supply growth is expected to remain at 1.9 percent for both years, which contributes to the real issue with the industry this year, Hite said.

“Because of supply and demand we will have negative occupancy growth, and the real story is the lack of pricing power,” she said.

Hite’s fellow panelist at the ALIS presentation, Mark Woodworth, senior managing director for CBRE Hotels Research, also was concerned about the lack of pricing power.

“There’s a growing suspicion that that old axiom of high occupancy which leads to scarcity which drives prices up can no longer hold true in our industry,” he said.

In fact, Woodworth said it appears that ADR runs in sync with occupancy, meaning if there is little change in occupancy, prices will stay the same.

“What we also know is that when occupancy declines, and we, too, have a short pull back expected this year, that clearly puts downward pressure on pricing capabilities,” he said.

Even if revenue does increase, hotels may actually keep less of it, said another panel member, Cindy Estis Green, CEO and co-founder of Kalibri Labs. Kalibri Labs tracks what guests pay to third parties, such as OTAs, not just revenue collected by the hotels, Green said.

“In looking at the forecast for that, we expect a slight slowdown,” she said. “Last year’s revenue growth was about 1.5 percent we expect it to be 1.3 percent this year.”

One reason is growth in wholesale commissions from $3.8 billion to $4 billion.

“So, there’s $4 billion in revenue that others collect that the hotels don’t collect that’s out there, and we want to track that in addition to net revenue.”

They expect only 0.9 percent growth in 2020, and “revenue capture,” or what hotels keep from what the guests pay, will drop below 83 percent this year.

“That means the revenue may increase, but we’re able to keep less of it,” she said. “The slowing revenue growth is a concern for the next couple of years going forward.”

While STR predicts occupancy decreases for all chain scale segments this year, it predicts upscale hotels will see the worst of it, dropping 0.9 percent. However, luxury hotels are expected to see the highest gains in ADR, up 1.2 percent, and in RevPAR, up 0.9 percent.

Independent hotels’ occupancy is expected to stay flat in 2021 while all other segments will see decreases. They will see the highest increase in RevPAR next year, a rise of 1 percent. Luxury properties will again see the highest growth in ADR that year, up 1.3 percent.

“Supply growth has been manageable when you look at the total numbers, but there has been a disproportionate amount of new inventory entering the limited-service marketplace,” Hite said. “While demand continues to be healthy in those segments, the jump in supply is going to put more pressure on performance levels.”

Also at ALIS, Choice Hotels International launched its new extended-stay midscale brand Everhome Suites and Wyndham Hotels & Resorts announced a new prototype for its Wyndham Garden brand.

More for you

Trump reviewing 55 million us visas
Getty Images

Trump reviewing 55 million visas

Summary:

  • The Trump administration says it is reviewing more than 55 million visa holders.
  • Reviews cover a wide range of visas for law enforcement and overstay violations.
  • The administration also suspended worker visas for foreign commercial truck drivers.

THE TRUMP ADMINISTRATION is reviewing more than 55 million people who hold valid U.S. visas for potential violations. It is expanding a policy of “continuous vetting” that could result in revocation and deportation.

Keep ReadingShow less
Peachtree Funds Rio Las Vegas Renovations | $176M CPACE Loan
Photo credit: Hyatt Hotels Corp.

Peachtree originates retroactive CPACE loan for Rio Vegas

Summary:

  • Peachtree Group originated a $176.5 million retroactive CPACE loan for a Las Vegas property.
  • The deal closed in under 60 days and ranks among the largest CPACE financings in the U.S.
  • The company promotes retroactive CPACE funding for commercial real estate development.

PEACHTREE GROUP ORIGINATED a $176.5 million retroactive Commercial Property Assessed Clean Energy loan for Dreamscape Cos.’s Rio Hotel & Casino in Las Vegas. The deal, completed in under 60 days, is its largest credit transaction and one of the largest CPACE financings in the U.S.

Keep ReadingShow less
Spark Acquires Home2 Suites Wayne, New Jersey
Photo Credit: Hunter Hotels

Spark acquires Wayne, N.J., Home2 Suites

Summary:

  • Spark acquired the 120-key Home2 Suites by Hilton Wayne in Wayne, New Jersey.
  • Hunter Hotel Advisors facilitated the transaction with DC Hospitality Group affiliates.
  • The 2020-built hotel is near William Paterson University and less than 20 miles from Manhattan.

SPARK GHC RECENTLY acquired the 120-key Home2 Suites by Hilton Wayne in Wayne, New Jersey, from affiliates of DC Hospitality Group. Hunter Hotel Advisors facilitated the deal for an undisclosed amount.

Keep ReadingShow less
Global hotel construction pipeline reaches record 15,871 projects in Q2 2025, with U.S. and Dallas leading growth
Photo Credit: iStock

Report: Global pipeline hits 15,871 projects

Summary:

  • Global pipeline hit a record 15,871 projects with 2.4 million rooms in Q2.
  • The U.S. leads with 6,280 projects; Dallas tops cities with 199.
  • Nearly 2,900 hotels are expected to open worldwide by the end of 2025.

THE GLOBAL HOTEL pipeline reached 15,871 projects, up 3 percent year-over-year, and 2,436,225 rooms, up 2 percent, according to Lodging Econometrics. Most were upper midscale and upscale, LE reported.

Keep ReadingShow less
HAMA Launches 20th Student Case Competition in USA
Photo Credit: iStock

HAMA launches 20th student case competition

Summary:

  • HAMA is accepting submissions for its 20th annual student case competition.
  • The cases reflect a scenario HAMA members faced as owner representatives.
  • Teams must submit a financial analysis, solution and executive summary.

THE HOSPITALITY ASSET Managers Association is accepting submissions for the 20th Annual HAMA Student Case Competition, in which more than 60 students analyze a management company change scenario and provide recommendations. HAMA, HotStats and Lodging Analytics Research & Consulting are providing the case, based on a scenario HAMA members faced as owner representatives.

Keep ReadingShow less