Economy Watch: A Strong Year for the Hotel Industry
- Jan 20, 2015
This year is going to be another good year for the U.S. hotel industry, even better than the strong 2014, according to recent predictions from various sources, including the most recent TravelClick North American Hospitality Review (NAHR) and PKF Hospitality Research (a CBRE company). As a strong year in hospitality, 2015 is going to build on 2014, which saw increases in all the major metrics of the industry–occupancy, average daily rates (ADR) and revenue per available room (RevPAR).
The reports chalked up the robustness in the market to rising levels of employment, combined with a geographic expansion of the national economic recovery. All in all, that’s spurring growth in “excess of long-run averages for all hotel chain-scales, most location categories and the vast majority of markets from 2014 through 2017,” as PKF put it.
“No matter what hotel performance indicator you look at for any type of hotel, we foresee extremely favorable movements the next few years,” R. Mark Woodworth, president of PKF-HR, notes. “Our firm is projecting demand growth to outpace changes in supply in the U.S. through 2016. That will result in industry wide occupancy levels at, or above, all-time record levels through 2017.” The outlook will be even better as long as energy prices remain low, which has an indirect impact on the propensity of people to travel.
The strength of the hospitality market is derived both from business and leisure travelers, and has been for some time now. According to TravelClick, RevPAR from business travelers was up 8.9 percent in the fourth quarter of 2014 compared with a year earlier, and leisure travelers accounted for an annual increase of 6.8 percent in RevPAR. Similar increases were recorded for ADR and occupancies in Q4 2014, and TravelClick predicts growth in all metrics of both business and leisure travel in 2015.
One travel market that’s enjoying a resurgence is Las Vegas, whose famed hospitality properties took a beating during the recession. The LV Convention and Visitors Authority reports that all hotel metrics for its market are up as well (RevPAR year-over-year in November 2014, for instance, gained 5.3 percent). 2014 will probably see a record number of visitors to the city, besting the most recent record in 2012, though the number of conventions held in Vegas hasn’t returned to mid-2000s levels just yet.