ADR Growth Continues to Outpace Occupancy Growth for Hotels

NEW YORK—Hotels continue to see a steady increase in revenue per available room (RevPAR) driven primarily by increases in rate, according to data from the March 2013 TravelClick North American Hospitality Review (NAHR). Occupancy remains steady for the remainder of the year.

“Looking forward, we see signs that occupancy and Average Daily Rate (ADR) growth will continue to be positive,” said Tim Hart, executive vice president, TravelClick. “However, there are signs of weakness in the group sector, as the pace of new group bookings continues to decline or flatten depending on the month. We believe this warrants a watchful eye.”

12 Month Outlook (March 2013 – February 2014)
When looking at the next 12 months, committed occupancy for the whole sector is increasing 1.9 percent year-over-year and ADR is showing a healthy gain of 3.5 percent.

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The group segment is showing an occupancy increase of 1.7 percent and an ADR gain of 0.8 percent compared to last year.

Transient bookings, which consist of individual business and leisure travelers, are up 2.6 percent year-over-year. ADR for this segment is up a healthy 5.0 percent. Currently, the leisure segment is the strongest, with demand up 2.4 percent and ADR up 5.6 percent compared to the same time period last year. Business travel demand is up 2.4 percent and ADR for this segment is up 4.5 percent.

“It is important for hoteliers to understand that it is unlikely that they will experience the same gains in both occupancy and ADR that they did in 2012,” Hart added. “While we do expect to see growth in the market overall, weakening group demand will make it hard for the industry to achieve the same level of performance it saw in 2012.”