Home
Hotel News
BITAC® Events!
Owners Event Dec. 03, 2017 More Info 3 Supplier Spots Left
Building Your Hospitality Business
  Are you a member? Log In  or  Sign Up
Best Western Hotels & Resorts
 
Share
Send a summary and link to this article
To Email
Your Name
Your Email
Bot Test
To pass the Bot Test, please type the white text that you see in the gray box. This helps us prevent spammers from abusing the system.
Print Printable Version

Hit Or Miss

Hoteliers Say It’s Market By Market When It Comes To First-Half Performance

Monday, August 15, 2016
Dennis Nessler
bookmark this
Bookmark to: Digg Bookmark to: Del.icio.us Bookmark to: Facebook
Bookmark to: Yahoo Bookmark to: Google Bookmark to: Twitter
We are on Twitter

I’ve talked to many hoteliers in the past few months at various industry events and when I invariably ask them if they are feeling the softness that’s been experienced throughout the U.S. lodging industry thus far in 2016, their response more often than not is “it depends on the market.”

And while that may not be the answer a reporter looking for bold statements on industry performance wants to hear, it is in fact the truth. We are all guilty of painting the industry with a broad brush when it comes to assessing the latest performance and trends. We tend to look at the overall U.S. occupancy, ADR and RevPAR growth and extrapolate from there. In fact, every major industry investment conference begins with such numbers.

Generally speaking, such statistics will give you a general sense of where things are headed and certainly provide guidance for Wall Street and other investors, but they only tell part of the story, particularly when looking at the current lodging landscape. Mike Marshall, president and CEO of Marshall Hotels & Resorts, recently noted, “We’re seeing softness in some markets; it’s hit or miss and more supply driven than anything,” he said.

Last week, STR unveiled its data for June, which rounded out the first half as well. There were no real surprises, the numbers for June showed more of the same, which is effectively muted growth nationally and a narrowing of the gap between demand growth, 1.9%, and supply growth, 1.6%. Of course, that’s never a good sign. However, a closer look at the data shows it’s being skewed dramatically downward by four major markets: Houston, New York, Chicago and Miami. Considering the relative size of these markets the impact is considerable.

According to Moody’s, which analyzes the data released by STR, Houston has been dramatically impacted by the sharp drop in the oil prices, while the other three markets have been hurt by reduced international travel as a result of a strong U.S. dollar.

In New York, for example, occupancy, ADR and RevPAR were down 1.5 percent, 2.5 percent, and 4.0 percent when compared to last June. The numbers in Houston are even more stark, with year-over-year declines of 7.7 percent, 2.0 percent and 9.5 percent in occupancy, ADR and RevPAR, respectively.

If you’re an owner with assets in these markets, your answer to the question about how performance has been trending is likely to be quite a bit different than an owner who might have a hotel in Nashville, for example. And there are plenty of owners have multiple holdings in both markets, who are experiencing the respective high and lows of each one.

Just as a number of markets are lagging the greater industry, there are some markets that skew the results in a positive sense as well. Nashville and San Francisco, in particular, have been thriving with double-digit RevPAR growth. Naturally, any average is going to be made up of high and lows, but the extremes seem to be a little more pronounced in this cycle.

The leveling off in performance for the U.S. hotel industry over the first half of 2016 is likely to lead to more caution going forward, particularly when it comes to new projects and certainly with regards to financing and investments. At the end of the day, that’s probably a good thing for the industry. Many had hoped the summer season would provide a lift to the industry and it still may, there was a slight uptick in June RevPAR over the first five months of the year, 3.8 percent versus 3.1 percent.

Regardless, what all the numbers tell us more than anything is that if you have the right product in the right market your business is doing just fine and should be for the forseeable future.
Credit
Dennis Nessler    Dennis Nessler
Editor-In-Chief
Operations
Hotel Interactive®, Inc.
more
Feedback Messaging & Feedback
We welcome your opinion! Log In to send feedback.
Already a member?
Login
Log In
Not yet registered?
Login
Sign Up
Need More Information?
Information
Benefits
 
  RSS Feed
RSS Feed
Policies
Contact Us
Mobile Version