us hotel occupancy

Hotel revenue growth has slowed significantly in 2016, and sources said they expect that to continue through 2017 as occupancy flatlines.

But even if performance might not be as positive as it has been, hoteliers shouldn’t start banking on a recession, sources said.

“I don’t think we’re in for a totally systemwide panic like we’re in a recession,” said Paul Breslin, managing director for Horwath HTL. “I don’t think this is that kind of cycle. I think we’re in a downward trend or softening of a strong cycle. The fundamentals are still strong.”

Bobby Bowers, SVP of operations for STR, said the industry is likely headed for an extended period of slow but steady growth in large part because there were no wild swings following the 2009 recession.

“2009 (revenue per available room) was down 17%, which was far and away the biggest drop we’ve ever tracked,” Bowers said. “And we haven’t really had a huge growth spurt since then. It makes you kind of think that if you had this big decline and you didn’t really have any huge gains in terms of snap back, then we’re probably in for an extended run of growth around 2% to 4%, which is not great but it’s not negative.”

By the numbers
STR is projecting flat occupancy for 2017, which is the result of supply growth (+1.9%) finally catching up to demand growth (also +1.9%) for the first time since the recession in 2009. Both those numbers are also set to surpass their 20-year compound annual growth rates—each at 1.7%—for the first time since 2009.

STR officials expect revenue per available room to grow 3.8% in 2017—once again the lowest total since 2009—driven entirely by a projected 3.8% increase in average daily rate.

Among the chain scales, upper upscale is expected to see the strongest year-over-year 2016 RevPAR growth at 4.3%, followed by luxury at 4.2%, while midscale could see the weakest with a projected 2.9% increase this year compared to last.

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