U.S. hotel revenue per available room grew in June to $98.85, according to STR, but that growth was 0.4 percent slower than in June 2018. This was the second month among the past 112 in which growth was slower than a year prior. While flat or slow growth was expected, June 2019 also suffered by comparison with June 2018 by having one less Friday.
The U.S. hotel industry, however, is still in a growth phase, said STR SVP of lodging insights Jan Freitag. He cited June's 73.5 percent occupancy, the second highest for June; June 2018 was the highest June ever. "However, healthy enough supply growth and a continued lack of pricing confidence continue to hinder the potential for any meaningful growth," Freitag warned. Average daily rate rose 0.9 percent to $134.52.
Upscale and upper-midscale hotels have felt the impact of supply growth the most. To date this year, RevPAR for upscale hotels is 0.4 percent lower than for the same period last year, while upper-midscale RevPAR is up just 0.1 percent, according to STR. "The most noticeable hit is in the select-service classes, where most of the new inventory is concentrated," Freitag said.
STR forecasts that RevPAR will grow 2 percent in 2019 and 1.9 percent in 2020, but hotel profit margins may be squeezed due labor costs growing faster than revenue, he said.
Among the 25 U.S. markets with most hotel rooms, Phoenix had the largest year-over-year RevPAR jump in June, at 9.5 percent. It also had the highest occupancy level rise, at 4.2 percent, and second-largest increase in ADR, at 5.1 percent. The largest lift in ADR was in Philadelphia, at 7 percent. Detroit saw the largest drop in occupancy, at 6.7 percent. Houston registered the steepest decline in ADR, at 4 percent. The largest decrease in RevPAR was in Orlando, at 9.8 percent.
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