Demand Exceeding Expectations in 2014 for U.S. Hotel Sector

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According to STR and Tourism Economics' revised forecast for 2014, demand for U.S. hotels is expected to increase 3.6 percent.

"The positive growth the hotel industry has seen thus far in 2014 is an encouraging sign," said Amanda Hite, president and COO of STR. "With this in mind we made positive revisions to our outlook for both 2014 and 2015. We anticipate hotels to continue to see growth in all three key performance metrics, despite an uptick in pipeline activity. We predict hoteliers will see positive results over the next 24 to 36 months."

The revised forecast incorporates the unexpected 4.5-percent demand growth during the second quarter, which will lift the full-year demand outlook for 2014.

That strong demand, coupled with a continued lack of new hotel openings, results in a projected occupancy increase of 2.6 percent to 63.8 percent in 2014.

"It is a great sign for the industry that group bookings have returned and are now complementing the already very strong transient room demand," said Jan Freitag, senior VP of strategic development at STR. "We expect pricing power to remain firmly in operators' hands."

Average daily rate is expected to increase 4.2 percent to US$115.02 in 2014, while revenue per available room is projected to grow by 6.9 percent to US$73.37.

"Strong RevPAR growth of just under 7 percent is a little unexpected during this part of the cycle, but points to a very robust demand growth from business and leisure travelers alike," Freitag said

In 2015, STR and Tourism Economics predict occupancy to rise 0.7 percent to 64.2 percent, ADR to increase 4.4 percent to US$120.13 and RevPAR to grow 5.2 percent to US$77.17. Demand is expected to increase 2.1 percent, and supply is predicted to increase 1.3 percent in 2015.