In the second quarter, there were two distinct hotel industries. Luxury properties commanded premium rates from wealthy travelers while budget and midscale accommodations struggled with declining demand.
According to CoStar, the U.S. revenue per available room (RevPAR), which is the measure of hotel revenue, has stagnated. This year’s forecast was a minus 0.1%. The performance of the hotel industry was significantly different based on economic factors. Luxury properties posted RevPAR gains ranging from 3%-7%, while economy hotels declined by 1%-3%.
What we can learn from the second-quarter results of seven of the largest publicly owned hotel companies
The importance of geographic and segment diversification is evident. In general, hotel groups that have a wide international presence as well as a diverse range of hotel types perform better in terms RevPAR.
The development momentum is still very strong, despite the RevPAR headwinds.
Loyalty programs continue to be a major driver of value.
Softening Growth
Companies with international exposure performed better than those with a U.S. focus. Around half of the 7 biggest publicly traded hotel companies reduced their RevPAR, and EBITDA guidance.
Last week, CoStar’s STR revealed the bitter truth about the U.S. Hotel Sector’s average growth of zero over the last three months. In the first six months, U.S. revenue per available room (RevPAR), grew by just 0.8%.
CoStar has revised their forecast for this year to -0.1%.
