DESPITE SOME NEGATIVE results in June, the U.S. hotel industry had a pretty good second quarter in 2019, according to STR. At the same time, occupancy remained flat for the quarter and down in June, and as expenses are expected to grow the forecast for future profit remains subdued.
Compared with last year, June’s occupancy was down 1.3 percent at 73.5 percent. ADR increased 0.9 percent to $134.52 while RevPAR went down 0.4 percent to $98.85. Occupancy fell 0.5 percent to 75.5 percent during the final week of the month.
“We were going to see a flat-to-low growth month regardless, but having one less Friday than last June replaced with a Sunday created even more of a drag on RevPAR comparisons,” said Jan Freitag, STR’s senior vice president of lodging insights.
Occupancy also declined a little for the second quarter, 0.1 percent to 70 percent, but ADR was up 1.2 percent to $133.01 and RevPAR rose 1.1 percent to $93.17.
“Despite that slight year-over-year decrease, the absolute occupancy level was the second-highest among all second quarters in our historical database,” said STR’s Senior Director of Consulting and Analytics Alison Hoyt. “The industry sold more nights than any other Q2 in history, but supply grew at a bit of a higher rate. Aside from that, the story was really the same as the rest of the first half of 2019. Occupancy levels were mostly flat, and a lack of pricing confidence meant an uninspiring RevPAR growth rate. We’re still in an expansion cycle, but with continued expense growth, specifically in labor departments, profitability is of significant concern in a lot of markets.”
Overall industry growth also shrank 0.4 percent in June, making it the second month in the 112-month current industry growth cycle to show a decrease, along with September 2018 when it shrank 0.3 percent. The longest expansion seen by the industry was 112 months, from December 1991 through March 2001, with increases in 111 of those months.
Minneapolis/St. Paul, Minnesota saw the highest increase in RevPAR for the second quarter, up 5.6 to $92, following the highest lift in ADR, up 6.1 percent to $128.22. Chicago and Tampa/St. Petersburg, Florida, saw the highest rise in occupancy, up 1.7 percent to 77.4 percent for Chicago and 1.7 percent to 74.6 percent in Tampa.