Supply growth forecast for hotels in 2017: STR

Hotels will still grow, but at a slower pace


By Allie Sanchez

Hotel industry growth will be sustained albeit at a muted pace in 2017, STR and Tourism Economics said in a report by trade publication Hotel News Resource.

In its final forecast for the year, the analytics firm said occupancy is expected to remain flat at 65.4% for 2016, but increases of 3.1% in average daily rate (ADR) and 3.1% in revenue per available room (RevPAR) were forecast for the industry.

Supply for 2016 is pegged at 1.6% but is expected to spike slightly to 2% in 2017, while demand is seen to post a marginal decrease from 1.6% in 2016 to 1.5% in 2017.

From a flat rate in 2016, occupancy will kiss negative territory with a 0.5% decrease next year.

Meanwhile, RevPAR will decline to 2.3%, while ADR will dip to 2.8%, STR further said in the report.

“As supply eventually outpaces demand, rate will determine the level of RevPAR (revenue per available room) growth the industry experiences for the next several years,” explained Amanda Hite, STR’s president and chief executive in the report.

“Given the continued lack of pricing power being displayed, we expect performance to weaken a bit for the final quarter of 2016 then decelerate more in 2017 as hoteliers become less confident in pushing rate. Nonetheless, demand is still growing to all-time highs, and RevPAR will continue to reach record levels,” she added.

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