Poor September Start Bad for US Hotel Market

The US hotel market has been causing concern for those considering real estate investment of late and the sector's...

The US hotel market has been causing concern for those considering real estate investment of late and the sector's performance at the start of September will do little to ease their minds. Data from STR revealed decreases in the three key performance metrics during the week September 1st to the 7th. In year-over-year comparisons, occupancy dropped by 1.9 per cent to 56.5 per cent, while average daily rates (ADR) fell 0.4 per cent to USD 102.58 (GBP 64.52). Revenue per available room (RevPar) declines rounded out the trio, down 2.3 per cent to USD 57.98.

Commenting on the market's performance, Jan Freitag, senior vice president of strategic development at STR, explained: "Rosh Hashanah and Labor Day had an adverse effect on hotel performance, RevPAR declined as both ADR and occupancy dropped from the same week last year. Of all the Chain Scales, only economy properties reported a very slight lift in RevPAR. The last end of summer vacation rush lifted resort RevPAR by 3.9 percent, driven by a 5.8-percent increase in ADR."

Of course, hotel performance varied across states, with some areas able to make gains. Among the top 25 markets, Denver, Colorado saw the the only double-digit occupancy growth, up 10.7 per cent to 68.8 per cent. Conversely, New Orleans, Louisiana fell 37 per cent to an occupancy level of 46.5 per cent. This is the largest decrease in the metric, followed by Washington DC at an 11.8 per cent fall to 49.7 per cent.

Hawaii managed a 14.3 per cent increase in ADR to USD 206.15, followed by Anaheim-Santa Ana, California, with a 7.7-percent increase to USD 121.75. Four markets saw growth in RevPar, including Nashville, Denver, Oahu Island and Anaheim-Santa Ana.

While the findings are just a snapshot of performance, they follow on from a weak summer. Increases in supply are driving down revenues and occupancy across the globe. While North America is overall bucking the trend, it hasn't escaped unscathed.

- Thursday 19 September 2013

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