While Hurricane Harvey in Texas and Hurricane Irma in Florida boosted the U.S. hotel industry to record levels of performance in 2017, Jan Freitag, STR’s senior VP of lodging insights said the industry has seen eight consecutive years of growth.

LAST YEAR’S STORMY weather contributed to record performance by the U.S. hotel industry, according to STR. That hurricane boost is fading now, but STR’s experts feel a strong U.S. economy will keep hotel revenue growing.

Records were set in 2017 for almost every performance metric used to measure the hotel industry’s performance, said Jan Freitag, STR’s senior VP of lodging insights, who spoke last week during the Hunter Hotel Conference’s “Statistically Speaking” session. “Part of what drove the strong results, particularly the room demand, was the impact of Hurricanes Harvey and Irma in Texas and Florida,” Freitag said.

However, a six-month analysis by STR has found that that boost that comes from hotel rooms filled by evacuees and emergency workers is beginning to level off.

“Historically, we’ve found that inflated performance growth lasts in a market for six to eight months after a hurricane hits,” said STR consultant Hannah Smith. “The impact was immediately visible after both Hurricane Harvey and Hurricane Irma as Texas and Florida each reported double-digit growth in demand and revenue per available room in the months following the storms. The increases in those two states were enough to lift overall U.S. performance significantly during the fourth quarter of 2017. Through two months in 2018, the gap is shrinking.”

Houston, Texas, which had seen double-digit growth from September to January, but in February the market did not match highs seen in that month the previous year when the city hosted the Super Bowl.  Still, ADR for hotels in the city reached $112.39 and RevPAR was $79.14, well above the 12-month moving averages in the market.

Similarly, most of Florida saw strong performance in demand and RevPAR, STR reported. But the Florida Keys, which had suffered the most property loss during the storms saw a 45.6 percent decrease in demand and a $43.4 percent drop in RevPAR in September over the previous year, reducing overall gains for the state.

“A significant decrease in hotel supply in the Florida Keys combined with the perception that the area is not yet ready for travelers have contributed to double-digit demand decreases in almost every month since Irma,” Smith said. “The only reason that occupancy and rate levels have not plummeted is the significant decrease in room supply that came due to the damage-forced property closures.”

But even as the benefits of last year’s storms fade, Freitag said STR expects continued growth, just as it has seen over the past 96 months. “The underlying strength of the hotel industry is the strength of the U.S. economy and the GDP,” he said. “We expect RevPAR will grow this year by 2.7 percent and next year by 2.4.”

Another positive sign for the industry is the decline in rooms under contract, Freitag said. That number hit 193,000 in February, below the record set in 2011 when supply peaked. Hotel room supply actually declined four out of the last five months. “We interpret this as a good sign that developers, despite eight years of RevPAR growth, will not overbuild,” Freitag said.