U.S. Lodging Industry to Continue Strong Performance


In the September edition of Hotel Horizons, a quarterly industry report, PKF Hospitality Research, LLC predicted continued strong performance within the U.S. lodging industry.  
 
“It is very rare for us to say we have no concerns about the near-term outlook for the U.S. lodging industry, but that is what we see from our econometric models, as well as discussions with our clients,” says R. Mark Woodworth, president of PKF-HR.  “If you look at the factors that historically have derailed the good times for hotel profit growth, very few, if any, exist today.”
 
According to the report, PKF-HR is forecasting U.S. hotels to have a 5.9 percent increase in RevPAR in 2013, followed by RevPAR gains of 7.2 percent in 2014 and 8.1 percent in 2015.  These projections are above the long-run average annual RevPAR increase of 2.9 percent as reported by Smith Travel Research (STR).
 
PKF-HR’s 2013 forecast of RevPAR growth is the result of a 1.6 percent increase in occupancy and a 4.2 percent rise in ADR.  In 2014, the prospects for growth accelerate for both occupancy and ADR.
 
Group demand, however, has been slow to recover, and occupancy levels among lower-priced hotels remain low. Even still, rate gains realized by branded, upper-priced hotel managers may be motivating consumers to use OTA websites.  From 2010 to 2012, upper-priced room rates increased a cumulative 7.5 percent; the comparable for lower-priced hotels was 3.2 percent.
 
Markets that continue to lag in ADR growth are Kansas City, San Diego, Tucson, Salt Lake City, Albuquerque, Philadelphia, and Washington, DC.  Hotels in all seven of these cities are forecast to achieve ADR growth less than the pace of inflation in both 2013 and 2014.