New hotel supply continues to challenge occupancy growth for
the U.S. hotel industry, according to August data from STR.
Despite more room nights sold than in any other August on
record, STR SVP of lodging insights Jan Freitag said, "there were almost 3
million additional room nights available compared with last August."
Occupancy increased 0.9 percent year over year to 70.7 percent. Average daily
rate increased 1.6 percent to $127.69.
Among the 25 U.S. markets with the most total hotel supply, he
said, strong supply growth caused the occupancy rate to decline for the second
month in a row. Philadelphia reported the greatest declines in both occupancy, 6.4
percent to 71.8 percent, and average daily rate, 8 percent to $121.74. Orlando
reported the largest gain in occupancy, 4.5 percent to 72.3 percent, while Nashville
reported the largest ADR growth, 10.9 percent to $142.
Hurricane Impact
Though Hurricane Harvey hit Texas in the final days of August,
Houston still slowed August's U.S. year-over-year ADR growth.
Hotels in Houston saw a bump in occupancy in the immediate
days following Harvey, according to an STR report released earlier this month. "Unlike
Hurricane Katrina, we haven't seen a significant amount of rooms go offline due
to storm damage," said STR senior director of consulting and analytics Ali
Hoyt. "However, we will assume there was damage to some construction
sites, so there may be a delay or even attrition with the 5,247 hotel rooms
under construction across the Houston market."
Outlying markets—including Austin, Dallas and San Antonio—also
experienced an uptick in demand, "likely due to shelters remaining full in
the Houston area," Hoyt said. Meanwhile, Harvey prompted significant
declines in occupancy in New Orleans, by 22.6 percent, and in the rest of
southern Louisiana.
Freitag said U.S. hotel performance could
improve in September, as demand increased and some supply went offline during
and after hurricanes Harvey and Irma, but fluctuation is expected in affected
markets including Houston, New Orleans and Miami.