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HDC: 5 US resort hotel performance trends
September 9 2013

U.S. resort hotels are posting positive growth in all three key performance indicators year to date, according to STR data.

Highlights
  • Year-to-date July, U.S. resort hotels saw a 1.4% increase in occupancy to 69.4%, a 5.4% increase in ADR to $189.91 and a 6.9% increase in RevPAR to $131.17.
  • U.S. resort hotels are selling more than seven out of every 10 roomnights during the weekends.
  • There are 58 U.S. resort hotel projects in the total active pipeline comprising 22,000 rooms.
     

NASHVILLE, Tennessee—Many popular resort destinations in the United States, such as Orlando and Las Vegas, suffered greatly during the last downturn. Despite decreased sentiment surrounding luxury travel following the AIG scandal, U.S. resort hotels are approaching prior peak performance levels, said Vail Brown, VP of global business development and marketing at STR, during a presentation titled “Resorts in the crosshairs” at the 5th annual Hotel Data Conference hosted by STR and Hotel News Now.

“We are now at a position of that second phase of recovery where we have average daily rate growth outpacing occupancy,” she said, adding that U.S. resort hotels are seeing 5.1% ADR growth and a 1% growth in occupancy on a 12-month moving average basis.

Year-to-date July, U.S. resort hotels saw a 1.4% increase in occupancy to 69.4%, a 5.4% increase in ADR to $189.91 and a 6.9% increase in revenue per available room to $131.17, according to data provided by STR, parent company of Hotel News Now. Brown added that occupancy and ADR are back to prior peak levels. However, on a 12-month moving average, both are not quite back, she said.

As of July, STR tracks 307 resort hotels in the U.S. comprising 154,000 rooms.

Following are five things to know about U.S. resort hotels’ performance:

1. Weekends versus weekdays
Resort hotels in the U.S. are selling more than seven out of every 10 roomnights during the weekends. In most cases, resorts have a 10% occupancy premium on weekends over weekdays. Sunday is the lowest performing day, while Saturday is the strongest. The days that saw the most extreme shift in hotel performance during the last downturn were Tuesdays and Thursdays.

2. RevPAR recovery
During the 2001 downturn, it took 68 months for RevPAR to recover. Since the 2008 downturn, U.S. resort hotels have seen 34 months of positive RevPAR growth, but RevPAR has not returned to prior peak levels on a 12-month moving average.

3. Transient ADR gaining momentum
Transient occupancies never really took a hit during the past downturn, Brown said. Transient occupancy fared well during July, outpacing prior years. Brown added that year-to-date July occupancy is up 2.9%. During July, transient ADR for luxury resort hotels was at $321.97. Year-to-date July, transient ADR is up 5.4%. Both transient demand and transient ADR are growing positively, creating many opportunities for U.S. resort hotels, Brown said.

4. 2013/2014 forecast/pipeline
STR Analytics created a custom forecast for U.S. resort hotels. For the remainder of 2013, supply is expected to grow 0.6%, with demand increasing by 1.6%. During 2014, U.S. resort hotels will see higher increases in both supply and demand, with a 2.6% increase in supply and a 3.5% increase in demand. There are 58 U.S. resort hotel projects in the total active pipeline comprising 22,000 rooms.

5. Group continues to lag
Group occupancy continues to lag, with an 8% gap when compared to 2007 group occupancy levels. Year-to-date July, occupancy growth has been flat, but group ADR is showing strong growth. During July, group ADR was at $210.55, higher than prior peak levels.

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