US hotels post a sluggish, albeit positive performance in August and preliminary September data continues the trend

US hotel performance during Aug-2019 in key metrics was positive, but largely lacklustre as rates and unit revenue each notched up just +0.9%. According to hotel data tracking firm STR occupancy at US hotels in Aug-2019 was flat year-on-year at 71.4% while average daily rates (ADR) and revenue per available room (RevPAR) each grew +0.9% to USD132.47 and USD94.55, respectively.

Phoenix, Arizona was the best performer among the US’ top 25 hotel markets, logging the only double digit jump in RevPAR of 11.2% to USD56.45 as the city’s hotel occupancy jumped +6.3% to 63.4%. Its ADR increased +4.6% year-on-year to USD89.05.

Orlando, Florida faced headwinds in Aug-2019, posting the largest drop in occupancy of -3.1% to 68.9%. Seattle, Washington experienced the steepest decline in ADR, with a slide of -6.5% to USD188.56, and RevPAR, which tumbled -9.3% to USD159.71.

“Even though room demand was once again strong with 2 million more room nights sold than last August, occupancy was flat when compared with last year,” says Jan Freitag, STR’s senior VP of lodging insights.

“As supply and demand growth are basically in equilibrium, all RevPAR growth stems from ADR, and that growth rate has been lacklustre,” she explains.

Over the first eight months of the year, ADR growth in the US has been below or just at the level of inflation, which creates quite a bit of pressure on profit margins. “This is a trend we’ve seen across chain scales and classes, and we do not expect the fundamentals to change much moving forward,” adds Ms Freitag.

The performance trend has continued into September, according to preliminary STR findings. For the first week of the month, week commencing 01-Sep-2019, negative year-over-year results were recorded in the three key performance metrics. Occupancy was down -1.1% to 61.0%, ADR declined -1.0% to USD121.37 and RevPAR slipped -2.1% at USD73.97.

Among the top 25 markets, New Orleans, Louisiana, experienced the highest rise in occupancy (+22.7% to 59.0%), which resulted in the largest increase in RevPAR (+24.2% to USD69.58). San Francisco/San Mateo, California, posted the largest lift in ADR (+6.2% to USD229.90). Atlanta, Georgia saw the only other double-digit increases in occupancy (+16.6% to 68.5%) and RevPAR (+23.6% to USD71.78).

Reflective of the anticipation of Hurricane Dorian’s landfall, Miami/Hialeah, Florida, reported the steepest decline in RevPAR (-27.0% to USD60.47), due primarily to the largest drop in occupancy (-20.8% to 47.6%). The market registered the second-largest decrease in ADR (-7.9% to USD127.12). Orlando, Florida, experienced the only other double-digit decline in occupancy (-14.8% to 51.9%) and the third-largest decrease in RevPAR (-13.7% to USD51.13). New York, New York, posted the largest drop in ADR (-8.3% to USD251.71).

Performance levels improved for the second week of September, according to the latest STR data, albeit only returning to the sluggish rates seen the previous month. For the week commencing 08-Sep-2019, occupancy levels were flat compared to last year at 69.6%, ADR was up +0.8% year-on-year to USD132.59 and RevPAR was up a similar +0.8% at USD92.26.

Among the top 25 markets, Norfolk/Virginia Beach, Virginia, registered the largest increases in each of the three key performance metrics: occupancy (+40.6% to 67.3%), ADR (+15.9% to USD99.69) and RevPAR (+63.0% to US$67.12). Washington, D.C.-Maryland-Virginia, saw the only other double-digit increases in occupancy (+12.2% to 78.0%) and ADR (+11.1% to USD179.83), which resulted in the second-largest jump in RevPAR (+24.7% to USD140.20).

Chicago, Illinois, posted the only double-digit decline in RevPAR (-12.0% to USD145.75), due primarily to the largest drop in ADR (-9.7% to USD179.85). Atlanta, Georgia, experienced the steepest decrease in occupancy (-8.3% to 69.3%) and the second-largest decline in RevPAR (-7.4% to USD78.90). Orlando, Florida, saw the second-steepest drop in occupancy (-8.1% to 58.5%), which resulted in the third-largest decrease in RevPAR (-5.6% to USD60.18).