Outlook for US Hotels 'Very Positive'

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The U.S. hotel industry is expected to see moderate increases by the end of 2013 and 2014, according to the latest forecast released by STR.

By the end of this year, the firm expects a 1.4 percent increase in occupancy to 62.2 percent, a 4.2 percent increase in average daily rate to $110.61 and a revenue-per-available-room increase of 5.7 percent to $68.85. 

"The outlook for the U.S. industry is very positive for the next 18 months," said Amanda Hite, STR president said in a report. "The industry will continue with favorable supply and demand conditions that will position the industry to see RevPAR growth driven mainly by ADR." 

The predictions will fall in line with recent industry performances. At the end of August, STR reported increases in both occupancy and revenue for hotel operators. 

In 2013, hotel supply is expected to increase by 0.8 percent and demand by 2.2 percent. In its latest U.S. hotel pipeline report, STR reported an 8.2 percent increase in August's total active pipeline compared to last year. There were 2,744 projects in construction or planning stages.

The firm expects a similar supply growth pattern for 2014. STR predicts a 1.1 percent increase in supply, but it will remain below the long-term average of 1.7 percent. 

In 2014, occupancy is expected to increase 1.3 percent to 63.1 percent, with a 4.6 rise in ADR to $115.73 and 6.0 percent in RevPAR to $72.97. 

The U.S. luxury hotel segment should report the largest increases in all three key performance metrics by year-end. Among the top 25 U.S. markets, three are expected to end the year with double-digit RevPAR increases: Houston, Texas; Oahu Island, Hawaii; and San Francisco/San Mateo, California.