The U.S. hotel industry saw year-over-year gains in both
average daily rate and occupancy during October, according to STR. Occupancy
increased 1.6 percent to 69.6 percent and ADR rose 2.5 percent to $130.20.
STR SVP for lodging insights Jan Freitag said the month's
occupancy level was the highest for any October on record. Hurricanes Irma and
Harvey, which made landfall in September, fueled increased demand for displaced
persons and aid workers in Texas and Florida. Houston reported a 32.6 percent
year-over-year spike in occupancy to 83.8 percent, while Miami saw occupancy rise
11.3 percent to 74.6 percent.
However, the hurricanes aren't the only anomalies in STR's
most recent metrics. According to Freitag, October marks the third straight
month to set a monthly occupancy record. That sort of demand growth is a boon
for hoteliers—PwC recently revised its own U.S. outlook
for 2018 upward—but it's also out of step with historical hotel cycles.
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Pressures Facing the U.S. Hotel Industry in 2017
In January, hoteliers voiced concern at the Americas Lodging
Investment Summit that occupancy would decline in 2017 and into 2018. That
would have made revenue per available room growth reliant on ADR growth. Instead,
hoteliers are seeing occupancy grow higher than forecast, and yet they're still
unable to grow ADR as much as expected. That was true in October, as well as in
most months during 2017, according to Freitag. There are a few theories on why,
during times of high demand, hoteliers don't have the same pricing power
they've had in previous cycles, chief among them being Airbnb.
But whatever the cause, it could mean this business cycle for hotels will look
nothing like in the past.