Los Angeles hotel market the big winner in 2016

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Demand growth for U.S. hotel room slowed last year, but occupancy remained at a record level, according to data research firm STR.

Revenue per available room (RevPAR) grew 3.2% last year, down from 6.3% growth in 2015. Occupancy rose 0.1 percentage point to 65.5%, and the average daily rate was $124 a night.

Los Angeles, Norfolk/Virginia Beach and Nashville were the three fastest-growing U.S. markets in terms of RevPAR, while Houston was hit particularly hard last year.

The number of hotel rooms increased 1.6%, on top of 1.1% growth in 2015. Notably, room supply rose by more than 5% in Houston and New York, which had the two largest RevPAR declines in the country last year.

While New York’s occupancy rate remained the country’s highest at 86%, RevPAR fell 1.1%.

Houston was hurt by challenges in the oil industry. The city’s RevPAR plunged 13% from a year earlier, while occupancy fell 6.2 points, to 62%.

Los Angeles’ RevPAR growth of 11% was the country’s highest last year, while Norfolk/Virginia Beach and Nashville’s RevPAR advanced 8.2% and 8%, respectively. Atlanta, Tampa/St. Petersburg and Dallas also all had RevPAR growth of more than 5% in 2016.

STR senior vice president Jan Freitag, who spoke at the Americas Lodging Investment Summit (ALIS) in Los Angeles this week, forecasted RevPAR growth of 2.6% this year, with room rates continuing to rise and occupancy remaining near its record level.

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