The US hotel industry also set records for supply (roughly 1.87 billion room nights available) and demand (roughly 1.23 billion room nights sold). Based on percentage growth for the year, demand (+2.7%) significantly outpaced supply (+1.8%), says STR, even though the supply growth figure was the largest for the industry since 2009.
Late-year demand growth, which was no doubt boosted by post-hurricane business in Houston and several major Florida markets, pushed well past a healthy influx of new rooms entering the marketplace. "That allowed the industry to end the year well above forecasted levels after seeing more modest rates of growth through the first half of 2017," explains Amanda Hite, STR's president and CEO.
"Given the tax cut and the stronger GDP growth that is expected, US hotels are in solid position moving through the next year," adds Ms Hite. "Construction activity is on the decline for the first time since 2011, so even as demand growth subsides, the effects on occupancy and rates should be more manageable for hoteliers," she adds.
The Blue Swan Daily reported earlier this month that the number of hotel rooms under construction in the US has declined or remained flat year over year for three consecutive months, according to pipeline data from STR. Overall, there were 179,979 rooms in construction across 1,400 hotels in Dec-2017, a 3.7% decrease compared with the same month in 2016. That decline followed a flat Nov-2017 (+0.6%) and Oct-2017 (-0.1%), and was the largest year over year room construction decrease in the US since Sep-2011 (-7.8%).
The latest data from STR shows that among the country's top 25 markets, Houston, Texas, reported the year's largest spike in RevPAR (+10.5% to USD71.97), due primarily to the largest increase in occupancy (+7.1% to 66.7%). The market's performance was lifted late in the year as the effects of Hurricane Harvey filled hotels with displaced residents, relief workers, insurance adjustors and other hurricane-related demand.
Elsewhere, Nashville, Tennessee, posted the largest rise in ADR (+6.2% to USD142.82) despite a supply-growth-related decline in occupancy (-0.8% to 74.1%), says STR, while Orlando, Florida, reported the only other double-digit jump in RevPAR (+10.0% to USD96.40), due to the second-highest increases in occupancy (+4.9% to 79.3%) and ADR (4.8% to USD121.53).
Overall, 18 of the top 25 markets recorded year-over-year RevPAR growth in 2017. With healthy supply growth ahead of its American Football Super Bowl host year, Minneapolis/St. Paul, Minnesota-Wisconsin, reported the steepest declines in ADR (-2.1% to USD115.89) and RevPAR (-3.6% to USD77.59). Also affected by supply growth, Dallas, Texas, experienced the largest drop in occupancy (-2.5% to 69.6%), notes STR. In absolute values, New York, New York, recorded the highest levels in occupancy (86.7%), ADR (USD255.54) and RevPAR (USD221.60).
The full year performance was supported by a strong Q4 where US hotel occupancy rose 1.8% to 61.7%, ADR was up 2.4% to USD125.34 and RevPAR increased 4.2% to USD77.34, according to the data. Among the top 25 markets it was Houston that experienced the largest increases in all three key performance metrics: occupancy (+26.8% to 72.5%), ADR (+11.1% to USD110.06) and RevPAR (+40.9% to USD79.82).