The U.S. hotel industry registered its tenth year in a row of revenue per available room growth in 2019, but at 0.9 percent year over year, it is the lowest growth rate since the recovery began in 2010, according to STR. The other two key statistics, occupancy and average daily rate, were flat at 66.1 percent and up 1 percent, respectively.
The absolute ADR of $131.21 and RevPAR of $86.76 values each were the highest STR has ever benchmarked. The industry also set records for supply and demand, with more than 1.9 billion room nights available and about 1.3 billion room nights sold. Both supply and demand increased about 2 percent during 2019 compared to 2018.
"The industry turned in another record year in terms of rooms available, rooms sold and rooms revenue," according to STR president Amanda Hite. "As was documented throughout 2019, however, RevPAR growth came in lower than any year since the last recession and well below the long-term historical average of 3.2 percent. With supply and demand growing in equilibrium, ADR is the sole driver of RevPAR gains. Unfortunately, with ADR rising below the rate of inflation, revenue growth is not keeping up with rising costs, such as increases in wages. That is a concern for owners and operators alike."
December's performance slightly helped the key indicators for the year. December's 2.6 percent RevPAR increase year over year matched February for the highest in 2019. "The ADR increase of 2 percent was the highest rate of change in the past 14 months, and occupancy increased 0.6 percent, driven up by healthy room demand growth of 2.8 percent," said STR SVP of lodging insights Jan Freitag in a statement.
Freitag credited part of the outperformance to the group segment, which had year-over-year December increases of 6.6 percent and 4.2 percent in occupancy and ADR, respectively. Group RevPAR for the month increased a healthy 11 percent. But overall, year-over-year group indicators for 2019 were more muted: Occupancy was down 2.3 percent, ADR was up 2.3 percent and RevPAR remained flat. STR's group statistics use the U.S. luxury and upper-upscale segments only.
"We've heard anecdotally there are markets seeing a stronger convention calendar in 2020, so the upside is that there is potential surprise on the demand side," Freitag told BTN. "But overall, it's probably fair to assume, since we are 10 years into the economic upcycle, the RevPAR cycle, that the groups that are meeting are meeting already. There is not a lot of stimulus that is coming for groups or corporate sales events or customer events to say, 'Now we are growing so much more so.' "
Overall, STR is not forecasting much in the way of growth for 2020, as "supply growth has remained manageable at the national level, but there is an uneven amount of new inventory in the limited-service sectors as well as in certain major markets," Hite added.
Among the top 25 markets for year-over-year changes in 2019, Phoenix reported the highest rise in occupancy, 1.6 percent, and RevPAR, 4.5 percent. Super Bowl LIII helped to give Atlanta the highest rise in ADR, 4.2 percent. Seattle showed the steepest decline in RevPAR, 4 percent, while Houston posted the largest drop in ADR, 3.2 percent. Three markets tied for the biggest decrease in occupancy at 3.2 percent: Boston, Detroit and San Diego.
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