2006 Hotel Stats Illustrate Seller's Market
Occupancy and revenues for U.S. hotels were up in 2006 as demand continued to outpace supply in the industry, according to full-year results released by Smith Travel Research in late January.
The Hendersonville, Tenn.-based lodging analysis firm reported occupancy for the year was 63.4 percent, up 0.5 percent compared with 2005. Room rates on average were up 7 percent to $97.31, and revenue per available room was up 7.5 percent to $61.69.
Although the growth in RevPAR was not as high as 2005, it still was significant, considering it has grown almost 24 percent since 2004. Smith Travel Research president Mark Lomanno said it marks the strongest three-year growth since the firm began tracking the industry in 1987, he said.
Overall revenue was up 8.1 percent to $100 billion, according to STR. Demand was up 1.1 percent for the year, compared with only a 0.6 percent increase in supply.
Lomanno said 2007 should be another strong year from the hotelier's perspective, as demand should continue to increase. STR predicted RevPAR growth would be up within the 5.5 percent and 6 percent range for the year.
Still, some shifts in buyers' favor loom. PricewaterhouseCoopers in its December hotel forecast said supply growth finally should outpace demand growth in 2008. Supply growth in 2007 should break the 1 percent mark for the first time since 2004, up to about 1.9 percent, and rise even higher to 2.4 percent in 2008, PwC said. Daily room sales, meanwhile, would be down in the 2 percent range.
Demand growth has not been consistent across tiers, either, according to PwC. The luxury, upscale and midprice without food and beverage categories have accounted for most of the growth, while other tiers largely have remained flat. Eight of the nine new brands introduced in 2006 were in higher-priced tiers.
On a global level, hotels saw rate growth across all regions, particularly the Asia/Pacific region, according to a hotel survey released Jan. 29 by travel management company HRG. Asia/Pacific rates increased 18 percent over the past year, particularly boosted by high-demand areas such as Mumbai, which saw a 49 percent increase in rates for the year.
Mumbai's was the largest increase in room rates globally for the year, according to HRG, followed by Chicago at 26 percent, Moscow at 25 percent, Singapore at 24 percent and Hong Kong at 20 percent. Moscow also remained the most expensive city for hotel rates, followed by New York, Bangalore, Paris and Hong Kong.
HRG also predicted a strong 2007 for hotels globally, although its report also said there should be some slowing of rate growth worldwide. This, however, would not apply to such high-demand cities as Moscow, Dubai and Mumbai. HRG said to expect further hotel consolidation globally, meaning fewer chains overall but more brands on the market.