The high volume of hotel construction activity of recent
years is finally catching up with the U.S. hotel industry, according to STR. Occupancy
declined 0.5 percent year over year in July to 73.8 percent.
STR SVP for lodging insights Jan Freitag said the industry
still sold more room nights in July than any other month ever on record—hotel
demand typically peaks in the U.S. every July. But that strength is being
offset by supply growth of 2 percent—higher than the long-term average of 1.8
percent—"and a further diminishment of pricing confidence," which led
to the lowest growth in revenue per available room since February 2010, when
RevPAR last decreased.
Nineteen of the 25 U.S. markets with the most hotel rooms
posted supply growth at or above the long-term average, and Freitag said demand
growth in many of those markets isn't keeping up. "We expect occupancy
declines to continue," he said. "But [average daily rate] growth,
although muted, will keep RevPAR positive."
ADR across the U.S. grew 1.4 percent year over
year to $130.85 during July. Among the top 25 markets, Detroit saw the greatest
gain, up 5.9 percent to $100.68. Miami experienced the largest growth in occupancy,
up 3.7 percent to 80.9 percent. Philadelphia posted the most significant
declines in both ADR, 21.5 percent to $124.10, and occupancy, 6.7 percent to
73.2 percent, as a result of the year-over-year comparison against the 2016 Democratic
National Convention. "Group occupancy was down 6.1 percent nationally, and
Philadelphia and Cleveland had a lot to do with that due to the national convention
comparison," Freitag said.