Sunday, May 31, 2015

Hotels: Best April Ever

by Bill McBride on 5/31/2015 09:54:00 AM

It looks like 2015 will be the best year ever for hotels (record occupancy and RevPAR).

It also looks like we are starting to see a pickup in supply growth (more rooms coming online). Most supply - in reaction to record demand - will eventually slow RevPAR growth, but will boost the economy by creating jobs.

Some interesting numbers from Jan Freitag at HotelNewsNow.com: Annualized occupancy at new high

1. A new number to report

April had the highest occupancy ever (66.8%) and the highest room demand (99.4 million rooms) ever.

This pushed annualized occupancy (measured as a 12-month moving average) up to 65%.

What does this mean? All key performance indicators (rooms available, rooms sold, revenue, average daily rate, occupancy and revenue per available room) are still at all-time highs.
...
Demand was 3 million rooms higher than last year, and supply was only 1.7 million roomnights higher. Ultimately that will change and the industry will sell less new rooms than build new rooms, but we do not expect that to happen until 2017.

3. This is the third consecutive month of +0.1% supply growth Supply growth hit 1.2% during the month. This is finally the acceleration of supply growth that we have been predicting after a slow 2014. Clearly there is momentum in the pipeline and the supply growth.