The largest U.S. hotel companies’ luxury brands are lagging behind their lower-end siblings this year when it comes to room-demand growth, lending credence to the theory that the U.S. lodging market might be nearing the end of its positive-demand cycle.
Marriott International, Starwood Hotels & Resorts and Hyatt Hotels all reported second-quarter results that suggested top-end demand growth had slowed or stopped altogether.
Marriott’s Ritz-Carlton had a North American RevPAR growth rate of 1%, trailing Marriott’s overall 3.2% RevPAR growth for the region.
Starwood’s St. Regis/Luxury Collection RevPAR fell 0.5% from a year earlier, and both Park Hyatt and Grand Hyatt had 2% RevPAR declines, compared with 2.3% companywide RevPAR growth.
Nonetheless, there were exceptions to the trend. InterContinental Hotel Group’s InterContinental brand kept pace with the company’s 3% RevPAR growth rate in the U.S. The biggest exception appeared to be Hilton Worldwide’s Waldorf Astoria group, whose 4.7% RevPAR increase outpaced the rest of the company’s 2.9%.
The slower increase in rates stem from a combination of what hotel operators described as weakness in corporate-transient business and the challenges of improving in a sector where occupancy rates had already been approaching 80%.
“Corporate investment has been soft and some cutbacks in travel, both individual business and small corporate groups, have occurred as a result,” said Mark Woodworth, senior managing director at CBRE Hotels.
Jan Freitag, senior vice president of hotel research firm STR, said, “You’re seeing a slowdown for sure.”
The luxury sector includes some of the country’s highest-profile hotels but accounts for just 5% of the approximately 5 million rooms nationwide.