Hotel sector on track for exceptional room demand, according to the Second Quarter National Hospitality Research Report. Healthy employment growth and increased consumer spending continue to drive hotel performance nationwide. Occupancy rose to a 30-year high in March, driving increases in ADR and RevPAR. The trend will continue as the stimulative effects of the new tax laws drive economic growth and unemployment remains low. Several markets with large development pipelines, however, may face supply pressures, reducing occupancy and slowing RevPAR growth.
- Record consumer and business confidence levels support expectations of strong consumption and business spending this year. These rising confidence levels will likely buoy room demand through the remainder of the year, keeping occupancy at a historical high.
- A healthy pace of hiring, rising wages and a low unemployment rate are underpinning strong summer travel expectations, with travel associations expecting travel expenditures to increase by 5 percent this year. Rising expenditures will bode well for hotel occupancy, ADR and RevPAR.
- The accelerating economy and improving property performance metrics have boosted supply additions in many markets, like Nashville, which may begin to weigh on occupancy improvement. The metro has more than 5,200 rooms underway, about 12 percent of its existing room inventory. Increased supply has outpaced room nights, with occupancy falling 60 basis points during the past 12 months.