Hotel Management — February 2012
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Trends & Stats
PKF-HR: I wish they all could be California hotels
If revenue growth is what you want, then PKF Hospitality Research recommends that U.S. hoteliers “go west.” Based on the December 2011 editions of Hotel Horizons, six of the top ten lodging markets forecast to experience the greatest gains in revenue per available room in 2012 are located in the state of California.
All six of the Hotel Horizons markets located in the state of California are projected to enjoy RevPAR growth greater than 7.3 percent in 2012. A slight nod is given to the markets located in Southern California (Anaheim, Los Angeles and San Diego) where RevPAR is forecast to increase more than 8 percent. In Northern California, hotels located in the Oakland, Calif.; Sacramento, Calif.; and San Francisco metro areas should see their revenue increase between 7.5 and 7.8 percent.
Other lodging markets leading the nation in 2012 RevPAR growth will be Seattle (8 percent) and Denver (7.3 percent). The only non-western markets in the top 10 are Charlotte (9.6 percent) and Memphis (7.8 percent).
ADR Driven
In aggregate, RevPAR for the 50 U.S. lodging markets in the Hotel Horizons universe is forecast to rise by 6 percent in 2012. This compares to a 6.1-percent increase forecast for the overall national hotel industry.
Given that most U.S. lodging markets are well into the recovery phase of their respective business cycle, it is not surprising that ADR is the main driver of RevPAR growth in 2012. In fact, in all but four of the 50 markets, ADR growth is projected to grow at a greater pace than occupancy in 2012.
Leading the U.S. in ADR growth in 2012 will be hotels located in the top 10 RevPAR growth markets of San Francisco; Oakland, Calif.; and Seattle. On the other hand, two (Memphis and Sacramento, Calif.) of the top 10 RevPAR growth markets are cities where occupancy will be the primary driver of revenue gains. Both of these markets are forecast to achieve occupancy levels less than 60 percent in 2012. It won’t be until 2013 that hoteliers in these cities should attain pricing power.
Occupancy Still Rising
The aggregate occupancy level for the 50 Hotel Horizons markets is forecast to reach 66 percent in 2012. This is just above the long-term average occupancy level of 65.9 percent for these metro areas. Even though metropolitan occupancy levels are starting to reach lofty levels, PKF-HR is forecasting occupancy to continue to grow in 38 of the 50 markets during 2012.
In total, the nation’s major markets are projected to experience a 1.1-percent increase in available rooms in 2012. This is less than half of the long-term average of 2.9 percent.
New York City is the lone exception to the limited increase in new hotel rooms, and leads the nation with a forecast increase in supply of 4.4 percent during 2012. With occupancy levels approaching 80 percent, New York has always attracted the attention of developers, even during the depths of the recession.
Concurrent with the low levels of new supply is a forecast increase in demand of 2.2 percent for the 50 major cities. This is greater than the 2.0 percent demand growth rate projected for the overall U.S. lodging industry.
Major sporting events and a strong convention calendar will push the demand for hotel rooms in New Orleans by 6 percent in 2012. On the other end of the spectrum, five markets in the U.S. are forecast to accommodate fewer guestrooms in 2012 than they did in 2011.
Revenue Rises For All
All 50 markets in the Hotel Horizons universe are forecast to enjoy an increase in revenue in 2012, but RevPAR growth rates run the gamut from 2.6 percent in Orlando, Fla., to 9.6 percent in Charlotte, N.C. We strongly encourage hoteliers to understand the changing RevPAR and occupancy trends in local market conditions and plan accordingly.
If revenue growth is what you want, then PKF Hospitality Research recommends that U.S. hoteliers “go west.” Based on the December 2011 editions of Hotel Horizons, six of the top ten lodging markets forecast to experience the greatest gains in revenue per available room in 2012 are located in the state of California.
All six of the Hotel Horizons markets located in the state of California are projected to enjoy RevPAR growth greater than 7.3 percent in 2012. A slight nod is given to the markets located in Southern California (Anaheim, Los Angeles and San Diego) where RevPAR is forecast to increase more than 8 percent. In Northern California, hotels located in the Oakland, Calif.; Sacramento, Calif.; and San Francisco metro areas should see their revenue increase between 7.5 and 7.8 percent.
Other lodging markets leading the nation in 2012 RevPAR growth will be Seattle (8 percent) and Denver (7.3 percent). The only non-western markets in the top 10 are Charlotte (9.6 percent) and Memphis (7.8 percent).
ADR Driven
In aggregate, RevPAR for the 50 U.S. lodging markets in the Hotel Horizons universe is forecast to rise by 6 percent in 2012. This compares to a 6.1-percent increase forecast for the overall national hotel industry.
Given that most U.S. lodging markets are well into the recovery phase of their respective business cycle, it is not surprising that ADR is the main driver of RevPAR growth in 2012. In fact, in all but four of the 50 markets, ADR growth is projected to grow at a greater pace than occupancy in 2012.
Leading the U.S. in ADR growth in 2012 will be hotels located in the top 10 RevPAR growth markets of San Francisco; Oakland, Calif.; and Seattle. On the other hand, two (Memphis and Sacramento, Calif.) of the top 10 RevPAR growth markets are cities where occupancy will be the primary driver of revenue gains. Both of these markets are forecast to achieve occupancy levels less than 60 percent in 2012. It won’t be until 2013 that hoteliers in these cities should attain pricing power.
Occupancy Still Rising
The aggregate occupancy level for the 50 Hotel Horizons markets is forecast to reach 66 percent in 2012. This is just above the long-term average occupancy level of 65.9 percent for these metro areas. Even though metropolitan occupancy levels are starting to reach lofty levels, PKF-HR is forecasting occupancy to continue to grow in 38 of the 50 markets during 2012.
In total, the nation’s major markets are projected to experience a 1.1-percent increase in available rooms in 2012. This is less than half of the long-term average of 2.9 percent.
New York City is the lone exception to the limited increase in new hotel rooms, and leads the nation with a forecast increase in supply of 4.4 percent during 2012. With occupancy levels approaching 80 percent, New York has always attracted the attention of developers, even during the depths of the recession.
Concurrent with the low levels of new supply is a forecast increase in demand of 2.2 percent for the 50 major cities. This is greater than the 2.0 percent demand growth rate projected for the overall U.S. lodging industry.
Major sporting events and a strong convention calendar will push the demand for hotel rooms in New Orleans by 6 percent in 2012. On the other end of the spectrum, five markets in the U.S. are forecast to accommodate fewer guestrooms in 2012 than they did in 2011.
Revenue Rises For All
All 50 markets in the Hotel Horizons universe are forecast to enjoy an increase in revenue in 2012, but RevPAR growth rates run the gamut from 2.6 percent in Orlando, Fla., to 9.6 percent in Charlotte, N.C. We strongly encourage hoteliers to understand the changing RevPAR and occupancy trends in local market conditions and plan accordingly.
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