uploads/2015/10/outlook.png

What Is the Future Outlook for the US Hotel Industry?

By

Updated

Outlook for 2015

According to STR’s and Tourism Economics’ updated forecast released on August 6, 2015, the US hotel industry is expected to show growth across all parameters for the rest of 2015 and 2016.

The updated forecast indicates occupancy will rise by 1.7% to reach 65.5% during 2015 and that the average daily rate (or ADR) will grow by 5.1%. The growth in these indicators will lead to a 6.8% growth in revenue per available room (or RevPAR). In 2015, demand growth of 2.9% is also expected to outshine supply growth of 1.2%.

The highest growth in occupancy is expected from the midscale and independent segments while the highest growth in ADR will come from the upscale and luxury segments. RevPAR will see maximum growth in the economy segment.

Article continues below advertisement

Outlook for 2016

For 2016, STR expects occupancy to increase by 0.8% to 66% and ADR to increase by 5.2%. This will lead to a RevPAR growth of 6% for 2016. Demand is also expected to be greater than supply in 2016. Demand is expected to grow by 2.2% as compared to the 1.4% supply growth.

21 of the top 25 markets for the US are expected to show RevPAR growth of more than 5%. Phoenix, Denver, and Tampa/St. Petersburg are expected to show even higher growth of 10% to 15%.

Amanda Hite, STR president and COO, said, “The next couple years will be great unless there’s an unknown factor we can’t anticipate.”

Investors can gain exposure to hotel stocks by investing in the Consumer Discretionary SPDR ETF (XLY), which holds 0.63% in Marriott International (MAR), 0.52% in Starwood Hotels (HOT), and 0.38% in Wyndham Worldwide (WYN). Other major hotel stocks include Hilton Worldwide (HLT) and Hyatt Hotels (H).

Advertisement

More From Market Realist