Hotel Revenue Growing

U.S. hotel revenue growth is slowing down, while expenses are on the rise.  According to CBRE Hotels’ Americas Research’s 2016 edition of Trends® in the Hotel Industry, operating performance continued to improve in 2015, but at a much slower pace.  Trends® is the firm’s annual survey of operating statements from thousands of hotels across the nation.  The data for the 2016 survey was processed in accordance with the new 11th edition of the Uniform System of Accounts for the Lodging Industry.

“After five years of strong increases in occupancy, average daily rate (ADR) and profits, U.S. hotels reached the top of the current business cycle in 2015,” said R. Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research.  “Therefore, it is not a surprise that Total Operating Revenues grew just 5.3 percent from 2014 to 2015.  What stands out as a concern for hotel owners and operators was the 4.7 percent increase in expenses, especially during a year when inflation was just 0.1 percent.”

Other Revenues Grow

From 2014 to 2015, 56.9 percent of the hotels in the Trends® sample posted an increase in occupancy, down from the 70+ percent marks posted the prior few years.  “This clearly is an indicator that hotels are approaching the top of the cycle when occupancy is at near capacity levels, and in certain markets the negative consequences of new supply growth are being felt,” said Woodworth.

86.1 percent of the properties in the sample were able to raise their room rates during the year, while 80.5 percent of the hotels were able to enjoy an increase in revenue per available room (RevPAR).  On average, the Trends® sample achieved a RevPAR gain of 4.6 percent.

“In 2015, we saw continued improvement in the growth of other hotel revenue sources beyond the rental of guest rooms.  During the year, Food and Beverage Revenue rose by a healthy 6.6 percent, while Miscellaneous Income (former Rentals and Other Income) grew by 25.4 percent,” Woodworth added.  Because of the strong growth in other revenue sources, Total Operating Revenue for the overall sample increased by 5.3 percent from 2014 to 2015.

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