Increases in occupancy and room rates are sustaining healthy revenue per available room (RevPAR) in the hospitality industry even as expansion shifts into a lower gear, according to Auction.com’s Q2 2015 Hotel Monitor report. The online real estate marketplace company projects that occupancy will reach 73.7 percent between now and 2018 as room rate growth simmers down to a still-healthy, mid-3 percent range. As a result, RevPAR growth will average 4.7 percent through 2018.
Second-quarter room rates continued to rise, increasing a seasonally adjusted 1.6 percent and pushing average daily rates (ADRs) 4.8 percent above the year-ago total, the report reveals. Room sales fell on a seasonally adjusted basis for the first time since mid-2012, but remained 2.7 percent above last year’s level. The drop in room sales pulled industry revenue down 2.2 percent from Q1 (adjusted seasonally), but still 2.7 percent above what was reported a year ago. Seasonally adjusted vacancies slipped to 65.2 percent from their Q1 high of 65.5 percent.
Although demand continued to outpace new supply in Q2, hospitality segment demand and supply curves came closer toward balance. The U.S. room count was up 1.1 percent year-over-year in Q2, matching the expansion pace of the previous quarter. Since 1990, the U.S. room supply has increased by an average pace of 1.7 percent per year, so despite the robust current operating conditions, room supply gains remain relatively modest.
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