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Hotel Room Demand and Rates are on the Rise

August 5, 2011 By: George Dooley Travel Agent

Data from the July 2011 TravelClick North American Hospitality Review, detailing hotel bookings currently reserved during the period June 31, 2011 through June 31, 2012, has revealed that revenue per available room (RevPAR) has shown consistent improvement for the past 18 months.

The overall industry average daily rate (ADR) for the same period was up 3.7 percent. The data also revealed that demand for the midscale hotel market is increasing, up 16.8 percent, for the next 12 months.  This represents one of the largest and most consistent increases in demand for this market segment since the recession, TravelClick reports.
TravelClick’s North American Hospitality Review also revealed that 3.3 percent more hotel rooms were sold during June 2011 as compared to June 2010.  Transient sales – individual business and leisure travel – continued to lead industry growth, as demand and ADR were both up 4.9 percent year-over-year for the future 12 months. Group sales remained soft, improving only 1.5 percent.

Larry Kutscher, chief executive officer for TravelClick, said,  “The data revealed by TravelClick’s North American Hospitality Review shows that individuals are traveling more thereby increasing demand at hotels and allowing them to raise rates.  This in turn represents a significant shift in the industry – hotels are not only seeing an increase in occupancy, but in ADR, RevPAR and profitability as well.”

RevPAR is measured by occupancy, multiplied by ADR.

Kutscher continued, “During the recession, the midscale hotel market was severely impacted.  The Review’s findings paint an optimistic view of the industry and the current state of the economy.  While the luxury segment continues to lead the way, the progress made in the midscale market may be an important indicator of the overall health of the industry.”

The markets showing the most improvement in overall occupancy (business, leisure and group travel) for the next 12 months include Philadelphia (15.8 percent improvement), Indianapolis (15.2 percent improvement) and Phoenix (8.7 percent improvement). The markets showing the least amount of improvement in occupancy over the same period are Dallas (7.6 percent decline), Atlanta (4.6 percent decline) and Denver (4.1 percent decline).

“Improvements in these markets can be largely attributed to strong group sales,” said Tim Hart, executive vice president, business intelligence at TravelClick.  “Indianapolis, Philadelphia and Phoenix have experienced 14.7 percent, 20.9 percent and 9.0 percent increases in group occupancy, year-over-year, respectively.  As group sales improve, so too will the overall health of the hospitality market.”

A notable market outlier for the coming 12 months is San Antonio. Bookings in the city show a double digit (15.9 percent) increase in transient occupancy, but the city is charging significantly less per room, as there is a 9.6 percent decrease in ADR, as compared to last year.

The third quarter of 2011 is far stronger than the second with hotels experiencing record levels of demand compared to last year, TravelClick says.  RevPAR is up 6.2 percent and occupancy is up 1.9 percent, year-over-year. The majority of this growth is driven by business and leisure travelers, as transient RevPAR experienced 10 percent growth and transient ADR grew 4.7 percent, year-over-year.

The TravelClick North American Hospitality Review is based on reservation and committed group sales data by hotel companies participating in TravelClick’s MarketVision Demand Position Product.  These include Gaylord, Hilton, Hyatt, InterContinental, Loews, Marriott, Omni and Starwood. The data is collected in 25 major North American Markets, representing 202 million annual room nights and $27 billion in annual room revenue.


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About the Author

George Dooley
George Dooley, Travel Agent’s senior contributing editor covering retail and technology, has a long-standing reputation as one of the top travel industry journalists. He notes...

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By George Dooley | August 5, 2011
Transient sales, or individual business and leisure travel, continued to lead industry growth.