The US hotel industry may have reported positive first quarter metrics, but its performance was ‘underwhelming’

The US hotel industry delivered positive results in the three key performance metrics during Q1 2019, according to data from benchmarking specialist STR. In a year-over-year comparison with Q1 2018, the industry posted a+0.4% rise in occupancy to 61.8%, a+1.1% increase in average daily rate (ADR) to USD129.02 and a growth of +1.5% in Revenue per available room (RevPAR) to USD79.68.

The quarterly data shows demand (+2.4%) outgrew supply (+2.0%) and STR says the absolute values in each of the three key performance metrics “were the highest for any Q1 on record”. However, year-over-year performance growth came in below projected levels.

“Q1 performance came in lower than forecasted as the industry reported its lowest RevPAR percentage change for an opening quarter since 2010,” explains Bobby Bowers, STR’s senior vice president of operations. “What made the quarter even more underwhelming was the fact that year-over-year results received a lift from the Easter calendar shift as well as significant group performance gains in San Francisco.”

The west coast city of San Francisco has benefitted from an influx of business at the reopened Moscone Center, following a USD551 million expansion and renovation of the convention and exhibition complex. Overall, San Francisco accounted for 40 basis points of that 1.5% increase of RevPAR in the US, says STR.

This helped San Francisco/San Mateo, California, post the largest lift in ADR (+15.9% to USD270.23) among the top 25 markets, which resulted in the largest increase in RevPAR (+15.9% to USD209.51). Tampa/St. Petersburg, Florida, experienced the highest rise in occupancy (+2.4% to 81.2%) during the quarter.

Super Bowl LIII host, Atlanta, Georgia, registered the second-largest jump in RevPAR (+14.1% to USD88.59), due primarily to the only other double-digit increase in ADR (+12.7% to USD126.19). Due to comparison with its Super Bowl host year in 2018, Minneapolis/St. Paul, Minnesota-Wisconsin, reported the only double-digit decline in ADR (-15.0% to USD109.04) and the largest drop in RevPAR (-19.0% to USD63.20). Philadelphia, Pennsylvania-New Jersey, saw the largest decrease in occupancy (-7.8% to 59.8%).

Looking into the second quarter and the initial weeks of Apr-2019 show a continuation of the trend. For the week of 31-Mar-2019 through 6-Apr-2019, STR reports occupancy up year-on-year by +0.4% to 68.7%. ADR was up +1.5% to US$130.79 and RevPAR +1.9% to USD89.90, although the growth was lifted due to comparison with Easter Sunday and the days immediately following in 2018.

Stronger growth was recorded across all three metrics for the subsequent week. For the week of 07-Apr-2019 through 13-Apr-2019, STR reports occupancy up year-on-year by+2.4% to 69.9%. ADR was up +4.4% to USD136.25 and RevPAR up +6.9% to USD95.22.