Compared with April 2015, the U.S. hotel industry’s occupancy increased 2.2% to 68.1%. Average daily rate for the month was up 2.8% to US$123.14. Revenue per available room grew 5.0% to US$83.89.
HENDERSONVILLE, TENNESSEE – The U.S. hotel industry reported positive results in the three key performance metrics during April 2016, according to data from STR.
Compared with April 2015, the U.S. hotel industry’s occupancy increased 2.2% to 68.1%. Average daily rate for the month was up 2.8% to US$123.14. Revenue per available room grew 5.0% to US$83.89.
“What goes down must come up, I suppose, and so April RevPAR was up 5.0%, driven equally by occupancy and ADR increases,” said Jan Freitag, STR’s senior VP for lodging insights. “Yes, the RevPAR increase was the best this year and the best since last October, but I really doubt that this marks the reversal of the rather weak performance of recent months. What strikes me is the lack of pricing power despite a demand push of 3.7%-the highest since September.”
Freitag noted that the 68.1% occupancy level was the highest STR has ever recorded for the month and that this was the first time that the industry sold more than 100 million roomnights in April. In addition, RevPAR performance has now been positive for 74 consecutive months.
“Yes, all of this is a reverse Easter comp – last year Easter fell in early April with negative implications, and those are now reversed,” Freitag said. “The first and second of April had RevPAR increases of more than 25%, basically lifting the month. Group occupancy, which was down 9.6% last month, was up 10.8% for the upper-end hotels. The meeting planners clearly did not stop booking; they simply just shifted the pattern from March to April.”
Among the Top 25 Markets, Dallas, Texas, experienced the only double-digit increase in occupancy (+11.0% to 80.9%) as well as the largest lift in RevPAR (+18.1% to US$86.91). ADR in the market was up 6.4% to US$107.45.
Of the eight additional markets to report double-digit growth in RevPAR, Los Angeles/Long Beach, California (+16.9% to US$144.39), was the only market other than Dallas that saw an increase of more than 15.0% in the metric.
Los Angeles/Long Beach also was the only market to show a double-digit increase in ADR, up 11.6% to US$173.50.
Miami/Hialeah, Florida, reported the largest decreases in ADR (-6.0% to US$201.32) and RevPAR (-7.4% to US$162.66). Occupancy in the market fell 1.5% to 80.8%.
The largest occupancy decline was reported in Houston, Texas (-4.8% to 67.5%).
“April was a pretty good month for the nation, and you would expect the same for the Top 25 Markets,” Freitag said. “Alas, for the large markets, RevPAR growth was only 3.8%, but for all other markets, it was 5.8%. The key difference is of course supply growth.”
Baird/STR Hotel Stock Index dips 3.5% in April
“While overall industry performance remains somewhat erratic, it is doing so at record levels,” said Randy Smith, STR’s chairman and co-founder. “For the month of April, on a seasonally adjusted basis, occupancy was the second-highest we have ever documented and both room rates and RevPAR hit record levels. Continued growth at previous levels will simply not be possible as the industry reaches occupancies not seen since the 1960s. Investors clearly recognize that the growth rates of the past few years are behind us, but seem to not realize just how well the industry is performing overall. Prices paid for recent acquisitions continue to highlight the difference between the public markets and what inside investors see as the value of the underlying assets.”
“Hotel stocks pulled back a bit in April after a big first-quarter rebound as recent industrywide trends have generally disappointed the investment community,” said David Loeb, senior hotel research analyst and managing director at Baird. “Hotel stocks are still outperforming the broader market year to date, aided by the higher offer price for Starwood and greater interest in hotel brands. While the credit markets and the velocity of transaction activity appear to be improving, which should provide a nice benefit to the REITs looking to sell assets, overall demand remains choppy, especially on the business transient side, and ADR growth remains constrained and below most management teams’ expectations.”
The Baird/STR Hotel Stock Index for April lagged behind the performance of the S&P 500 (+0.3%) and the MSCI REIT (RMZ) (-2.5%).
The Hotel Brand sub-index reported a 2.7% decrease to 4,260 in April. The Hotel REIT sub-index experienced a 5.4% decline to 1,382 during the month.
Tatiana is the news coordinator for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). Her role includes monitoring the hundreds of news sources of TravelDailyNews Media Network and skimming the most important according to our strategy.
She holds a Bachelor's degree in Communication & Mass Media from Panteion University of Political & Social Studies of Athens and she has been editor and editor-in-chief in various economic magazines and newspapers.
