Group items tagged

U.S. EXTENDED-STAY HOTELS set new records for demand, ADR, RevPAR and room revenues in the fourth quarter of 2022, according to a report from hotel investment advisors The Highland Group. Also, the report showed rate resistance is apparent at lower price points due to recession and the economy extended-stay segment reported nine consecutive months of declining demand and three successive quarterly falls in occupancy. According to the Highland Group's "U.S. Extended-Stay Hotels: Fourth Quarter 2022" report, mid-price extended-stay hotels reported their second consecutive quarterly decline in occupancy in fourth quarter. Similar occupancy declines occurred for about two years starting in mid-2015 before ADR growth moderated and occupancy recovered. Extended-stay hotel supply growth was the lowest since 2013 during the quarter, below its long-term historical average for 20 consecutive quarters. The last time extended-stay supply growth was consistently near its current level was from 2010 fourth quarter through third quarter of 2014. "Extended-stay hotel RevPAR was more than 12 percent higher than in fourth quarter of 2019. There were 567,770 extended-stay hotel rooms open at the end of the quarter. Excluding 2020, the 6,481 net gain in rooms open over the last year was the lowest annual increase since 2012. Room nights available increased 1.2 percent over the last year which was the smallest annual gain in supply for nine years," the report said. "Fractional net economy and upscale segment supply gains compared to 2021 are largely due to re-branding moving rooms between segments in our database, de-flagging of hotels which no longer meet brand standards, as well as the sales of some hotels to multi-family apartment companies and municipalities."

BOUTIQUE HOTELS GENERATED more annual RevPAR than traditional hotels in the U.S. last year, according to a report from consulting agency The Highland Group. Hotels focused on experiential stay, exceptional design and amenities also attracted a rate premium, the report said. Boutique hotels are classified into independent boutique, lifestyle hotels and soft brand collections. The Boutique Hotel Report 2022 has said that upper midscale, upscale and luxury soft brand collections recovered strongly in 2021 in performance metrics against their US upscale counterparts, while the upper upscale class was ahead in rate recovery and lagged in occupancy. According to the report, lifestyle upper upscale and luxury hotels recovered at parity with their counterparts, while upper midscale and upscale lifestyle hotels reported slower recovery in both occupancy and average rate. "Upper midscale and upscale independent boutique hotels in urban locations recovered at a stronger pace than all U.S. hotel in urban locations in both performance metrics.

MOST ECONOMY AND MID-PRICE extended-stay hotels' performance in September was down compared to August, according to a report from hotel investment advisors The Highland Group. However, the bottom-up recovery and room supply distribution geographically are hindering the upscale segment's recovery. Relative to other classes of hotels, mid-price extended-stay hotels recorded the largest gain in September, the U.S. Extended-Stay Hotels Bulletin: September 2021 report said. Occupancy, ADR and RevPAR indices for upscale extended-stay hotels were about the same in September as in August but the decline in absolute ADR resulted in the segment's revenue recovery falling below 95 percent. Economy and mid-price segments both reported about a three-point gain in ADR recovery index in September compared to the month before. The upscale segment's ADR remained unchanged, the report said. "The mid-price extended-stay segment's gains in both ADR and occupancy pushed it slightly ahead of the upscale segment in terms of RevPAR growth. Because the overall hotel industry lost far more RevPAR than extended-stay hotels, its RevPAR growth in September 2021 compared to last year was 85 percent more than extended-stay hotels," the report added.

REVPAR FOR U.S extended-stay economy, mid-scale and upscale segments is recovering back to pre-pandemic levels, according to a report from consulting firm The Highland Group. Total extended-stay hotel occupancy is very close to the first quarter levels reported in 2016 and 2017 but below its peak years since 2015. "Overall, first quarter extended-stay hotel ADR was the highest ever reported in 2023 and all three segments have more than fully recovered their 2019 nominal ADR values," the report said. In its "2023 First Quarter U.S. Extended-Stay Hotels Report," Highland said the economy and mid-price extended-stay hotels made considerable gains in RevPAR relative to corresponding classes of all hotels between 2019 and 2023. Due to high concentration of rooms in urban markets, upscale extended-stay hotels have seen RevPAR decline slightly relative to all upscale class hotels. However, the gap is expected to narrow as urban markets make a full recovery, the report noted. "Rising interest rates and construction costs, as well as tightening loan underwriting, means extended-stay supply growth should be relatively low nationally for two to three years. Assuming the overall hotel industry does not endure a correction, extended-stay hotels should set more new performance records during the near term at least," says Mark Skinner, partner at The Highland Group.

U.S. EXTENDED-STAY HOTELS set new performance records for demand, ADR and RevPAR in the third quarter of 2022, according to a report from The Highland Group. However, rate resistance is growing at lower price points as recession fears loom. The "U.S. Extended-stay Hotels: Third quarter 2022" report by the Highland Group said that the economy extended-stay segment reported six consecutive months of demand drop and two successive quarterly falls in occupancy in the quarter ending September. "Mid-price extended-stay hotels reported first quarterly decline in occupancy since fourth quarter of 2020. Excluding the last 15 months, extended-stay hotel ADR is still increasing at the fastest rate for 20 years but, like the overall hotel industry, ADR growth continues to decelerate," the report said. "The slowdown in ADR growth is greatest at higher price points although mid-price and upscale extended-stay ADR is still increasing faster than the economy segment."

THE STATE OF the U.S. hotel industry is strong going into 2024, according to American Hotel & Lodging Association's 2024 State of the Hotel Industry report. Average hotel occupancy is expected to reach nearly 63.6 percent in 2024, a slight increase from the 62.9 percent in 2023 but below the 65.8 percent rate recorded in 2019. Nominal RevPAR is also anticipated to rise to $101.82 in 2024, up by 4 percent from 2023 and over 17 percent from 2019. AHLA projects hotels will pay employees a record sum of over $123 billion in wages, salaries, and compensation in 2024, surpassing $118 billion in 2023 and $102 billion in 2019. Hotels are expected to add approximately 45,000 employees this year, while the industry's workforce remains nearly 225,000 below the almost 2.37 million employed in 2019, the AHLA report said. The report, projecting persistent challenges for hoteliers in the face of nationwide labor shortages as they approach 2019 occupancy levels, draws on data and analysis from Oxford Economics. It was developed in collaboration with AHLA Premier Partners: STR, Avendra, Ecolab, Encore, JLL, Oracle, and Towne Park.

THE U.S. HOTEL industry will continue its recovery in 2022, but the path will be uneven and potentially volatile, according to a report by the American Hotel & Lodging Association. It added that a full recovery from the impacts of the COVID-19 pandemic will take several years. AHLA's 2022 State of the Hotel Industry report also revealed shifts in consumer and business sentiment. The report was created in collaboration with Accenture and is based on data and forecasts from Oxford Economics and STR. According to the report, hotel occupancy rates and room revenue will approach 2019 levels this year, but the outlook for ancillary revenue, which includes F&B and meeting space, is less optimistic. Leisure travelers will continue to drive recovery, the report added. Hotels lost a collective $111.8 billion in room revenue alone during 2020 and 2021. Business travelers made up 52.5 percent of industry room revenue in 2019 and it will be 43.6 percent in 2022. Business travel will be down more than 20 percent for much of the year, the report said. As the full effects of Omicron is not yet known, just 58 percent of meetings and events are expected to return. AHLA report said that the rapid rise of bleisure travelers-those who blend business and leisure travel-are impacting hotel operations now. A recent study revealed that 89 percent of business travelers wanted to add a private holiday to their business trips in the next twelve months.

ANNUAL CHANGES IN U.S. hotel utility costs and in the Consumer Price Index, or inflation, have historically proven to be strongly correlated. As of August 2022, CBRE is forecasting CPI growth to be 7.7 percent in 2022, followed by another 3.6 percent in 2023. Since inflation has averaged just 2.2 percent since 2000, these inflation projections have hoteliers concerned about operating costs. Given that rising energy costs are a significant driver of the current rise in CPI, hotel managers are especially worried about utility department expenses. Over the past 50 years, utility department expenses have averaged between 3 and 4 percent of total revenue, indicating that hotel managers have been successfully controlling energy costs in the face of fluctuating business volumes. This is particularly commendable given the highly fixed nature of utility expenses. To provide some context to the current challenging environment, we studied recent trends in hotel utility department expenses. The data come from a sample of more than 2,800 U.S. hotels that reported utility department expenses each year from 2015 through 2021 for CBRE's annual "Trends in the Hotel Industry" survey. In 2021 the properties in the sample averaged 209 rooms in size, with an annual occupancy rate of 54.2 percent and an average daily rate of $152.70.

IN THE FIRST week of February, U.S. weekly hotel occupancy eclipsed 50 percent for the first time in more than a month, according to STR. However, occupancy declined for the week under review when compared to the same period in 2019. Occupancy was 50.4 percent for the week ending Feb. 5, up from 49.7 percent the week before and down 15.8 percent from the comparable week in 2019. ADR was $125.06 for the week, up from $122.40 the week before and down just 1.2 percent from two years ago. RevPAR reached $63.05 during the week under review, up from $60.82 the week before and down 16.8 percent from the same period two years ago. According to the report, none of STR's top 25 markets recorded an occupancy increase over 2019. Norfolk/Virginia Beach came closest to its pre-pandemic level, down just 0.6 percent to 47.3 percent.

NOVEMBER BROUGHT A little less for U.S. hotels to be thankful for compared to the prior month, according to STR, but also saw improvements over 2019's performance. Meanwhile, with Christmas a week away, performance surpassed the comparable time period for 2019. Occupancy for November reached 57.6 percent, down from 62.9 percent in October and down 6.2 percent compared to 2019. October's occupancy was 8.8 percent lower than the same month in 2019. ADR was $128.50 for the month, lower than October's $134.78 but 2.4 percent higher than November 2019. RevPAR also was down on a month-to-month basis, $74.03 versus $84.75, but it was only down 3.9 percent from the same month in 2019 versus a 7.6 percent difference between October 2021 and October 2019. New York City had the highest occupancy for the month among STR's top 25 markets with 71.2 percent. That was still down 17.9 percent from 2019. None of the top 25 markets saw higher occupancy than 2019.

THE BAIRD/STR Hotel Stock Index rose 12.7 percent in December over the previous month. It was up 25.6 percent for 2021 as a whole. The index outperformed both the S&P 500, up 4.4 percent, and the MSCI US REIT Index, which rose 8.2 percent in December. The hotel brand sub-index increased 13.2 percent from November while the Hotel REIT sub-index rose 10.9 percent. Investment was bolstered by some, if not good, then less bad than expected news regarding the COVID-19 pandemic, said Michael Bellisario, senior hotel research analyst and director at Baird. "Hotel stocks ended a volatile year with strong gains in December as the worst-case scenarios related to the Omicron variant appeared unlikely to unfold as initially feared," Bellisario said. "With the big rebound into year-end, the hotel brands ended up slightly outperforming the S&P 500 in 2021, while the hotel REITs - despite gaining 12 percent on the year - significantly lagged the RMZ's best-ever annual performance. Turning the calendar to 2022, leisure travel strength is expected to persist, but the wildcard for the overall industry's continued recovery remains a more substantialreturn of the business traveler."

THE 2020 COVID-influenced lodging industry recession resulted in some noticeable changes to the way hotels provide F&B service. Social distancing regulations forced operators to be creative in the way they served food and beverages to guests. Rising wage rates and sharp increases in the cost of food and beverage products compelled hotel managers to find ways to control costs. The inability of hotels to attract employees to fill the positions eliminated during the recession required creative solutions to improve productivity and offer more with less. These factors resulted in the following hotel food and beverage trends during the subsequent recovery period: The increased offering of kiosks and grab-and-go venues The closing of traditional three-meal-a-day restaurants A reduction in the menus, number of seats, and hours of remaining F&B venues Reductions in in-room dining and mini-bar service The conversion of food and beverage space to other revenue generating purposes To learn how these recent changes in hotel food and beverage operations have impacted revenues and expenses, we have analyzed the operating statements of 2,500 U.S. full-service, resort, and convention hotels that participated in CBRE's annual Trends in the Hotel Industry in 2021 and 2022. In 2022, these 2,500 properties averaged 285 rooms in size, and achieved an occupancy of 64.7 percent, along with an ADR of $225.60. To provide more current information, we also relied on the monthly operating statements of 1,200 properties during the period January through June of 2023.

ADR GROWTH FOR U.S. extended-stay hotels reached a record high in February, according to hotel investment advisors The Highland Group. Owing to this, the segment saw record high demand and monthly RevPAR up by more than 40 percent during the month compared to a year ago. During the month, occupancy growth was also significant with extended-stay hotel's occupancy premium compared to the overall hotel industry staying well above its long-term average. The 3.1 percent increase in extended-stay room supply in February is the fifth consecutive month of 4 percent or lower supply growth, according to "U.S. Extended-Stay Hotels Bulletin: February 2022" report by Highland Group. It suggested that mid-price and upscale supply increases should be well below pre-pandemic levels during the near term, the report added.

U.S. HOTEL PERFORMANCE moved closer to pre-pandemic levels during the third week of November according to STR. It dipped, however, from the week before. Occupancy was 59.7 percent for the week ending Nov. 20, down from 61.6 percent for the week before and a slight decrease of 2.1 percent from the same period two years ago. ADR for the third week of the month was $126.66, down from $129.98 the week before and increased 1.7 percent when compared to two years ago. RevPAR decreased to $75.60 for the third week of the month from $80.02 the week before, and a slight drop of 0.4 percent for the same period in 2019. Among STR's top 25 markets, Phoenix saw the largest occupancy increase during the week under review, up 6.4 percent to 76.6 percent over 2019. Miami reported the largest ADR increase when compared to 2019, 25.5 percent to $207.72. Oahu Island, Hawaii, experienced the steepest occupancy decline from 2019, down 35.2 percent to 51.8 percent.

TOTAL EXTENDED-STAY HOTELS achieved new fourth-quarter milestones in 2023, setting records in supply, demand, ADR, RevPAR, and room revenues, according to The Highland Group. Despite this, occupancy declined alongside the broader hotel industry trend, with slower growth in ADR and RevPAR throughout the year. Consequently, extended-stay hotel RevPAR experienced its smallest fourth quarter increase since 2019, excluding contractionary periods. Extended-stay hotel supply growth increased marginally in 2023 but remained very low, the report said. The last time supply growth consistently hovered around its current level was from the fourth quarter of 2010 through the third quarter of 2014. Throughout this period, supply increases stayed below their long-term historical average for 20 consecutive quarters, while the federal funds rate was about 10 times higher than its current level. With interest rates and construction costs expected to stay relatively high, the risk of extended stay hotel oversupply nationally is low in the near term, despite the launch of several new brands, The Highland Group said.

ECONOMIC HEADWINDS AND geopolitical concerns are expected to affect U.S. hotel performance in 2024, according to PwC. The issues include continuing high interest rates and the Israel-Palestine conflict. Occupancy levels have consistently decreased over the past seven months compared to the same period in 2022. This downward trend is anticipated to persist for the remainder of this year and extend into at least the first quarter of 2024. However, PwC forecasts a 63 percent annual occupancy rate for US hotels this year. Hotels in the U.S. experienced a weakening in leisure demand during the latter part of this year, as global vacation destinations reopened, and leisure travelers regained confidence in traveling abroad, PwC said in its latest report titled U.S. Hospitality Directions: November 2023. Moreover, gains in individual and group business travel haven't completely counteracted this softening.

U.S. HOTEL PERFORMANCE saw an uptick in the third week of March compared to the previous week, although year-over-year figures continued to decline, according to CoStar. Key metrics such as occupancy, ADR and RevPAR continued their upward trajectory during this period compared to the preceding week. Occupancy increased to 66.5 percent for the week ending March 16, up from the previous week's 63.2 percent, reflecting a 1.4 percent year-over-year decline. ADR rose to $163.21 from $156.96 the previous week, marking a 2.1 percent decrease compared to last year. RevPAR reached $108.51, up from the previous week's $99.17, signifying a 3.5 percent decrease compared to the same period in 2023. Among the top 25 markets, Seattle reported significant year-over-year increases in occupancy, rising by 12.7 percent to 73 percent, and in RevPAR, which increased by 21.7 percent to $120.29.

DEMAND FOR U.S. extended-stay hotels in the fourth quarter of 2021 was more than five times greater than supply, resulting in overall occupancy just below its 2019 peak, according to the Highland Group. December's monthly report from the group also showed the segment to be firmly in recovery. According to the research consulting firm's "U.S. Extended-stay Hotels: Fourth quarter 2021" report, the bottom up recovery continues with economy and mid-price extended-stay hotels in the fourth quarter posting record nominal average rate and RevPAR. Demand in the fourth quarter is at a record high and room revenues are almost 97 percent of their nominal high reached during the same period in 2019, the report said. Occupancy and ADR remain 4 to 5 percentage points off previous high levels but should pick up in the near term as the demand change was six times the corresponding change in supply, it added.

U.S. HOTEL PERFORMANCE exhibited mixed results in the first week of May compared to the prior week, according to CoStar. Among key metrics, occupancy declined, whereas both RevPAR and ADR saw an uptick. Occupancy dropped to 64.4 percent for the week ending May 4, down from the previous week's 65.7 percent, marking a 0.8 percent year-over-year decrease. ADR rose to $159.97 from $154.44, reflecting a 1.3 percent increase compared to last year. RevPAR climbed to $103.09, up from $101.42 the prior week, indicating a 0.5 percent increase compared to the same period in 2023. Among the top 25 markets, Seattle reported the highest year-over-year increase in occupancy, rising by 8.1 percent to 69.4 percent. Dallas recorded the largest increase in ADR, up 5.8 percent to $134.33.

U.S. HOTEL PERFORMANCE exhibited mixed results in the third week of April compared to the previous week, according to CoStar. Key metrics such as occupancy and ADR saw slight increases, while RevPAR declined from the preceding week. Occupancy rose to 66.8 percent for the week ending April 20, up from the previous week's 65.8 percent, but marked a 0.3 percent year-over-year decrease. ADR dropped to $158.60 from $160.20, a 1.5 percent increase compared to last year. RevPAR climbed to $105.94 from $105.48 the prior week, showing a 1.2 percent rise compared to the same period in 2023. Among the top 25 markets, Philadelphia saw the most significant year-over-year occupancy surge, soaring by 14.3 percent to reach 72.1 percent, while RevPAR also notably increased by 23.2 percent to $114.11.