Investors Maintain Confidence in Hospitality Market As Occupancy and Revenue Metrics Improve
Hotel room demand persists. The U.S. hospitality sector has recorded increases in occupancy and revenue metrics during the year ending in June as room demand remained healthy. Employ-ment growth nationwide and the rising median household income will support travel in the near future. Both domestic and inter-national travel continue to rise, further benefiting room demand. Potential headwinds do exist including the growing construction pipelines in many major markets that may place downward pres-sure on occupancy, the average daily rate and RevPAR this year and into 2018.
- During the last 12-month period, hiring in office-using sectors rose 2.4 percent nationwide as 734,000 workers were added to staffs. Healthy job growth and a tight employment rate of 4.4 percent bolstered medium household incomes by 2.8 percent during this time. The rising incomes may spur additional leisure travel while increased jobs may further business travel.
- Domestic and international passenger travel in the United States rose 3.8 percent during 2016. In particular, international travel provides hotel operators opportunities for stronger demand drivers as passengers more than doubled in the last three years.
- Texas and California have more than 20,000 rooms each that are expected to break ground in the next 12 months. The increased supply may place downward pressure on occupancy in the coming years.
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