Freitag’s 5: February brought growth, a game-changer
 
Freitag’s 5: February brought growth, a game-changer
30 MARCH 2018 8:14 AM

February 2018 STR data shows the U.S. hotel industry growing across the board, while an announcement by Airbnb has implications for the future. 

HENDERSONVILLE, Tennessee—February was a good month, and performance was healthy across the board. But Airbnb made an announcement that in the long run might change the industry.

1. Happy birthday consecutive RevPAR growth
In February, U.S. revenue per available room increased 3.5%, marking the 96th consecutive month of growth since the upturn began. It was driven by average-daily-rate growth of 2.3% and not insignificant occupancy growth of 1.2%.

The last six months, starting with the hurricanes in September 2017, were interesting:

Occupancy growth has actually accelerated, but ADR growth has not slowed further and has, if anything, slightly ticked up. ADR has now grown at or over 2.3% for four of the last five months.

2. Pipeline data
Well, look there—another month of declines in rooms in construction. The number of rooms in construction, even though 193,000 strong, was down 0.7%. Even though sequentially there was a slight uptick, I do not think that is surprising given that in (slightly) warmer weather more projects will start.

3. Big growth in the Big Apple
New York City had another good month, with demand up 6.5% and RevPAR up 3.6%. You know me, I don’t like to call a trend a trend until it is trending, but NYC is on its way to having a good spring if the early data is any indication:

4. 12 MMA occupancy up, but not matched by ADR
Through February, 12-month moving average occupancy increased a full 1%, and we have not seen occupancy growth this strong since January 2016 (then +1.2%). Here is a fun little chart about occupancy growth:

Don’t you just love the smell of accelerating occupancy change in the morning?

But because I cannot leave good enough alone, here is the same chart with the corresponding ADR change:

Right? That is what I thought. Sad, indeed. And as I pointed out before, if you are not careful the Consumer Price Index growth will eat your lunch—or profits, as it were.

5. Airbnb
I have not really talked about Airbnb the last few years because nothing really changed since 2012. But now times are a-changing for sure. So here is my little Airbnb sermon. See what you think.

Last month, I wrote that SiteMinder had announced it is now the connector for hotels to list on Airbnb. But details were sparse.

So three weeks ago, Airbnb co-founder and CEO Brian Chesky announced, to no one’s surprise, that Airbnb is now open to hotels. Airbnb added a button on its app, helpfully labeled “boutique,” and seriously, life will never be the same for the hotel industry.

Here is my prediction and timeline for how this will play out in the hotel space:

  1. Individual boutique hotels will list single rooms on Airbnb.
  2. The process of approving the room will be tedious and ultimately be automated; then full hotels will be listed.
  3. Boutique chains (think Thompson, W, 21c, Kimpton) will—rightfully—argue that all their properties should be added, and ultimately they will be.
  4. Owners of those branded hotels will realize the commission savings against the existing OTAs: potentially around 5% for Airbnb versus 12% to 15% for the standard OTA. They will, vocally, push the brand parent companies to make a deal with Airbnb to list ALL branded hotels on Airbnb. Airbnb will resist.
  5. Airbnb will go public.
  6. Wall Street values growth, and with the number of apartments finite because of increased scrutiny by city regulators, Airbnb needs another way to grow its listings.
  7. Airbnb will realize that listing ALL hotel rooms supports its growth. And, ta-da, Airbnb will open itself up to get all hotels listed on its platform.
  8. Eventually Airbnb will add flight info, and then it’s a full-blown OTA.

So, to me, the threat from Airbnb is not to hotels; it’s to Expedia and Booking. Just for giggles, I went through transcripts for fourth-quarter earnings calls of the big six hotel companies, looking for references to Airbnb. And, guess what, no CEO or analyst talked or asked about it. Then I looked through the calls for Expedia and Booking, and saw a different story:

So, watch this space. But I think 22 February will be remembered as the day when we felt a disturbance in the (hotel) force.

This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.

5 Comments

  • Margaretta April 6, 2018 11:50 PM Reply

    I guess finding useful, reliable infoamrtion on the internet isn't hopeless after all.

  • Jodecy April 20, 2018 9:57 PM Reply

    I'm impressed by your writing. Are you a professional or just very knoegedlwable?

  • Jodecy April 20, 2018 9:57 PM Reply

    I'm impressed by your writing. Are you a professional or just very knoegedlwable?

  • Adelphia April 20, 2018 10:19 PM Reply

    Times are chianngg for the better if I can get this online!

  • Russ April 29, 2018 8:57 PM Reply

    Did I miss the March 2018 update?

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