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.
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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.