U.S. hotel revenue forecast downgraded again

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STR and Tourism Economics again have revised downward their U.S. hotel forecast for revenue per available room (RevPAR) in 2019 and 2020.

In their final forecast for the year, STR/Tourism Economics said they expect RevPAR to grow 0.8% for 2019 and 0.5% for 2020 -- the lowest growth rate since the Great Recession of 2008.

STR/Tourism Economics had previously forecasted that U.S. hotel RevPAR would increase 1.6% and 1.1% for 2019 and 2020, respectively.

"U.S. hotels have posted nine straight years with RevPAR increases of basically 3% or higher, so growth levels below 1% will clearly represent the industry’s worst years since the recession," said STR president Amanda Hite. 

Seattle (minus-4.1%) and New York City (minus-3.5%) are projected to have the U.S.'s steepest RevPAR declines for 2019, and RevPAR in the country's Top 25 markets in aggregate is expected to dip 0.5%.

For this year, STR estimates that U.S. hotel occupancy will be down 0.2%, while average daily rate (ADR) will grow 1%. Supply is expected to increase 2% and demand is predicted to be up 1.8%.

For 2020, U.S. occupancy is projected to fall 0.4%, concurrent with a 0.9% increase in ADR. Supply is expected to grow 2% and demand 1.5%. 

"The major factor in our revisions continues to be a lack of pricing confidence," Hite added. "Supply growth is coming in ahead of demand growth a bit sooner than expected, so occupancy levels are slightly lower than projected, and ADR has grown below the level of inflation for five consecutive quarters."

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