Industry Update
Performance29 January 2019

STR, TE downgrade U.S. hotel forecast for 2019 and 2020

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Smith Travel Research

The U.S. hotel industry is projected to report a further slowdown in performance growth in 2019 and 2020, according to STR and Tourism Economics' latest forecast just released at the Americas Lodging Investment Summit.

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"Late in 2018, RevPAR growth weakened as strong demand was offset by lower-than-expected ADR growth," said Amanda Hite, STR's president and CEO. "Now demand is softening, and although supply growth is stabilized, we expect our first year without an increase in occupancy since 2009. Combine more pressure on occupancy levels with already subdued pricing confidence, concerns over labor costs, a cooling economic environment, and the negative sentiment brought on by the recent government shutdown, and you have a recipe for diminished RevPAR growth. Performance growth of any rate will still take the industry to another record-breaking level nationally, but plenty of individual markets and hotels are feeling the slowdown on their bottom line."
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2019

For 2019, the U.S. hotel industry is projected to report flat occupancy at 66.2%, a 2.3% rise in average daily rate (ADR) to US$132.81 and a 2.3% lift in revenue per available room (RevPAR) to US$87.94. RevPAR increased 2.9% in both 2018 and 2017—that growth level was the lowest RevPAR percentage change for the country since 2009.

Among chain scales, the Midscale segment is likely to report the only increase in occupancy (+0.1%). Luxury chains are expected to post the highest growth rates in ADR (+2.5%) and RevPAR (+2.3%). While all segments should report RevPAR increases for 2019, the lowest rate of RevPAR growth is projected in the Upper Midscale segment (+1.7%).

2020

For 2020, STR and Tourism Economics project the U.S. hotel industry to report a 0.2% decrease in occupancy to 66.1%, a 2.2% lift in ADR to US$135.68 and a 1.9% rise in RevPAR to US$89.65. Occupancy in the U.S. has not declined year over year since 2009.

The highest overall rate of RevPAR growth (+2.1%) is once again expected in the Luxury segment, while the lowest (+1.4%) is projected among Midscale chains.

About STR

STR provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. For more information, please visit str.com.

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