U.S. Hotel Industry to Enjoy Continued Performance Increases Through 2017

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According to STR and Tourism Economics' first forecast of 2016, the U.S. hotel industry is projected to experience continued year-over-year performance increases through 2017.

For 2016, the U.S. hotel industry is predicted to report a 0.6% increase in occupancy to 65.9%, a 4.4% rise in average daily rate to $125.30 and a 5.0% increase in revenue per available room to $82.60. During that same period, demand growth (+2.3%) is expected to outweigh supply growth (+1.7%).

"We are projecting healthy RevPAR growth in 2016, and RevPAR will continue to be driven by room rate," said Jan Freitag, STR's senior VP for lodging insights. "We expect ADR to rise 4.4%, which is the same level of increase as 2015. At the same time, industry occupancy is at an all-time high. Even a small year-over-year increase will lead us to another record year for occupancy."

Among the Chain Scale segments in the U.S., Economy is expected to report the largest increase in occupancy (+0.9%) during 2016. Upper Upscale is projected to see the greatest rise in both ADR (+4.6%) and RevPAR (+5.2%). 

For 2017, STR projects the U.S. hotel industry to post a 0.2% increase in occupancy to 66.1%, a 4.3% rise in ADR to $130.63 and a 4.5% increase in RevPAR to $86.28.

Also in 2017, demand growth (+2.1%) is once again expected to be higher than supply growth (+1.9%). Demand growth in the U.S. has outpaced supply growth each year dating back to 2010.