NASHVILLE, Tennessee—Chain-affiliated hotels are driving the United States supply growth, according to Bobby Bowers, senior VP of operations at STR, the parent company of Hotel News Now.
As of July, 65% of hotels in the U.S. were branded hotels, Bowers said during his “Chain scales 101: Right product, right place, right now” presentation at the 6th annual Hotel Data Conference hosted by STR and Hotel News Now.
Bowers presented several trends during his 30-minute presentation, including:
1. Chains are seeing strong performance
On a 12-month moving average from January 2000 through June 2014, revenue per available room for chains has grown 6.5%, while average daily rate has increased 4%.
“Occupancies are moving up,” Bowers said. “That’s a great thing, and I think we’re going to continue to see that as we move through 2014 and 2015.”
2. Demand growth is strong, and supply isn’t an issue
In all segments, demand is growing faster than supply, according to the data presented.
The economy segment was the only one to report a decrease in supply (-0.1%). On a 12-month moving average through June, supply and demand growth for each segment was:
3. ADR growth is healthy across all segments
Through year-to-date June, the luxury segment clocked the highest ADR growth out of the six chain-scale segments, increasing 4.7%. The luxury segment, Bowers said, has a $133 ADR premium over the upper-upscale segment.
“That’s why it’s hard to build a luxury hotel and make it work,” he said, adding that the gap between the ADR of those two segments is higher than the gap between the upper-upscale segment and economy at the other end of the spectrum ($109 premium).
The upper-upscale and upscale segments followed luxury in ADR growth, with both increasing by 4.5%. The economy segment was right behind that with an increase of 4.3%.
4. The upper end sells 7 of 10 rooms
On a 12-month moving average through June, the upper end of the industry is selling approximately seven out of 10 rooms, according to Bowers.
The luxury segment enjoyed the highest occupancy out of the bunch at 74.7%. The upper-upscale and upscale segments followed, with occupancy of each at 72.7%.
The economy segment saw the lowest occupancy at 55.9%.
5. Luxury RevPAR is higher on the weekends
Bowers said RevPAR on the weekend for the luxury segment clocked in at $230 on a trailing 12-month basis through June. Weekday RevPAR was $227. For this analysis, the weekdays were counted as Monday through Thursday. The weekend consisted of Friday and Saturday, with Sunday omitted.
“This must mean there’s a lot of leisure going into the luxury hotels as well,” Bowers said.
The upper-midscale segment also saw higher weekend RevPAR at $72, while its weekday RevPAR was $68. Additionally, the midscale segment had weekend RevPAR of $54 and weekday of $42. The economy segment saw weekend RevPAR of $38 and weekday of $29.