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Analyzing the US Hotel Industry's Key Indicators in 2Q17

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Part 2
Analyzing the US Hotel Industry's Key Indicators in 2Q17 PART 2 OF 8

Hotel Occupancy Fell in June after Staying Robust until May

Occupancy level 1Q17

In 1Q17, US hotel occupancy rose 0.9% year-over-year (or YoY) to 61.1%. This rise reflected the industry’s strongest ever first-quarter occupancy.

However, this performance was boosted by the inclusion of several holidays and events in the quarter, including Easter, the 2017 women’s march, and the presidential inauguration.

Hotel Occupancy Fell in June after Staying Robust until May

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YTD May 2017 performance

For the first five months of 2017, US hotel occupancy has been able to clock growth. Year-to-date (or YTD) in May 2017, occupancy rose 0.7% YoY to 63.7%. In May alone, hotel occupancy rose 1.5% YoY to 67.8%, the highest ever May occupancy level for US hotels.

Occupancy falls in June

However, in June, US hotel occupancy has been falling. Occupancy fell 1% YoY to 63.9% in the week ended June 3. It fell 0.8% YoY to 73% in the week ended June 10, 0.3% YoY to 74.3% in week ended June 17, and 1.2% YoY to 75.8% in the week ended June 24.

Forecast for 2017

Occupancy was on a rising trend from 2010 to 2016 as a result of demand growth’s outpacing supply growth. With this set to change in 2017, STR expects US hotel occupancy to fall slightly. The company expects occupancy to reach 65.2%, a 0.3% YoY fall. On the other hand, both CBRE Hotels and PricewaterhouseCoopers expect US hotel occupancy to remain flat at 65.5% in 2017.

You can gain exposure to the hotel sector by investing in the First Trust Consumer Discretionary AlphaDEX ETF (FXD), which invests ~14.8% in the hotel, restaurants, and leisure industry. It holds 0.58% in Wyndham Worldwide (WYN), 0.87% in Hyatt Hotels (H), 0.90% in Hilton Worldwide Holdings (HLT), and 1.2% in Marriott International (MAR).

In the next article, we’ll discuss average daily rates for hotels, another key hotel industry indicator.

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