by Bill McBride on 11/05/2015 01:41:00 PM
Thursday, November 05, 2015
Hotels are on pace for the best year ever in terms of occupancy, even with competition from online sharing sites like Airbnb. Here is an article from HotelNewsNow: NYC hoteliers report modest Airbnb impact
The report, titled “Airbnb and impacts on the New York City lodging market and economy” and conducted by HVS Consulting and Valuation for the Hotel Association of New York City, breaks down losses to the New York City hotel industry and local economy attributable to Airbnb specifically. The study results showed losses of $451 million in direct revenue; $136 million in ancillary losses, such as food and beverage; construction losses of $1 billion; indirect effects of $102 million; induced effects of $115 million and $227 million in taxes.So far the impact has been modest and most hotels in the U.S. are seeing record occupancy (see below).
The $451 million in lost hotel revenue assumes all Airbnb customers would have otherwise booked a hotel room. ...
Hoteliers interviewed by HNN for this article did not comment directly on HVS’ findings. But by and large, hoteliers agreed they aren’t necessarily feeling the same effects as outlined in the HVS analysis when it comes to loss of rate and occupancy.
The key reasons for record occupancy are travel is up significantly, and there were few new hotels built following the financial crisis (limited inventory growth). However, lodging investment is up 39% year-over-year, and there will be new hotels coming.
My guess is the CRUNCH for online sharing will come when there are more hotels, and when the economy slows down again. I suspect the online sharing sites will come under serious pressure from both hoteliers and local tax collecting agencies when the occupancy rate starts to decline (in addition to neighbor complaints). But for now it is good times for all.
And here is weekly update on hotel occupancy from HotelNewsNow.com: STR: US results for week ending 31 October
The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 25-31 October 2015, according to data from STR, Inc.The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average. Hotels are now in the Fall business travel season.
In year-over-year measurements, the industry’s occupancy increased 1.2% to 62.3%. Average daily rate for the week was up 5.1% to US$120.46. Revenue per available room increased 6.4% to finish the week at US$75.06.
The red line is for 2015, dashed orange is 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels. Purple is for 2000.
I added 2001 (yellow) to show the impact of 9/11/2001 on hotel occupancy. Occupancy was already down in 2001 due to the recession, and really collapsed following 9/11.
For 2015, the 4-week average of the occupancy rate is solidly above the median for 2000-2007, and above last year.
Right now 2015 is above 2000 (best year for hotels), and 2015 will probably be the best year ever for hotels.
1) 2015 67.6%
2) 2000 67.0%
3) 2014 66.4%
Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com
Posted by Bill McBride on 11/05/2015 01:41:00 PM