The U.S. hotel industry recorded steadily improving performance through the third quarter, but there's one factor under the surface that is helping to keep things positive.
In the latest episode of "Tell Me More: A Hospitality Data Podcast,” CoStar National Director of Hospitality Analytics Jan Freitag said that low supply growth continues to be the "saving grace" across the industry.
"In June [supply is] up 0.5%, year to date up 0.5%, so that's really helped us in June to get occupancy basically flat with where we were a year ago as demand and supply growth are in equilibrium," he said. "It's not a great number, but it's because supply growth is so low, it allows us to really grow demand a little bit that then gets us to flat occupancy."
He said hoteliers should be thankful for the fact that supply growth is likely to remain muted for the near term.
STR Vice President of Analytics Isaac Collazo said June was the most "normal" month of the second quarter after April benefited from an Easter holiday shift and May came in better than expected.
Revenue per available room was up 1.5% year over year in June.
But Collazo said the trend of bifurcation that has defined the broader hotel industry is still very much in effect.
"RevPARs range from up 3.2% year to date in upper upscale to minus 4.2% in economy," he said.
An important note for hoteliers is they seem to be losing some pricing power, after average daily rates grew 2% in the first quarter but only 1.6% in the second, Collazo added.
More From This Episode
Other topics in this episode include:
- Freitag dives into takeaways from the 2024 Deloitte Corporate Travel Survey, including a slim majority of travel managers saying they're increasing their travel this year and insights into what kind of business travelers are more likely to break corporate travel policies.
- Collazo points out that while hotel performance might feel volatile, data shows things are actually more stable now than they were even pre-pandemic.
- After decades of open seating, Southwest Airlines announced a historic shift to selling premium, assigned seating, and the two experts dive into what the hotel equivalent to that might be and what's driving the change.
- Collazo and Freitag find comparison between the hotel industry and the Olympics — highlighting the facade of serenity of synchronized swimming compared to the chaos under the surface.
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