Rome’s mixed performance numbers are keeping developers at arm’s length, even though the city continues to attract more international visitors who come to savor the delights of the Eternal City.
HENDERSONVILLE, Tennessee—Rome’s hoteliers are facing a rough beginning to 2019.
In the first five months of the year, revenue per available room in the Italian capital increased 0.5%, basically in line with the 2017 year-to-date growth rate of 0.1%.
Through May 2018, RevPAR increased 4.8%, but this was driven by a strong February when RevPAR increased 14%.
For full-year 2018, the 521 hotels in the market sold more than 10.8 million room nights, an increase of 2.2% over 2018.
Tourism Economics expects that in 2019, the market will welcome more than 9.9 million international visitors, an increase of 1.5% over 2018, thus making it the 12th-most visited city (by international visitors) in the world.
InsideAirbnb estimates that there are more than 13,000 alternative accommodation units and private rooms available in the most recent months.
Rome continues to attract visitors, but the question is can hoteliers there capitalize on this positive momentum?
Occupancy nears previous peak
Marketwide occupancies peaked at just a shade more than 74% in the years between 2000 and 2006, just prior to the global downturn.
More recently, occupancy grew from 67% in 2010 to approximately 69.5% in 2015.
Over the last two years, Rome occupancy reached just under 71% (2017) and just under 72% (2018). The increase in occupancy can be attributed to the fact that hotel room supply declined between the years 2012 and 2016 and only increased by less than 1% in the last two years.
So far this year, demand has declined in four of five months, with year-to-date demand and occupancy declining 2% and 2.2%, respectively.
This does not bode well for the summer months of June and July when occupancies are already quite high (over 82% last year) and will be difficult to grow further.
Average daily rate growth is the name of the game to drive RevPAR, but, unfortunately, growth has been anemic at best and declining in 2014 (-1%) and 2017 (-2.5%).
The 2018 ADR growth of 3.6% was driven partially by the International Bar Association meeting in October when ADR increased 8.8% to €175 ($197.22). This compares to the annual ADR of €150 ($169.04).
The inconsistent performance results in the Roman hotel industry have led to very limited developer interest.
Supply has grown only 0.4% in 2017 and 0.6% in 2018, and so far this year, supply has grown by four hotels. It remains to be seen if the uneven market level RevPAR results will attract more capital in the long run.
While tourist and meeting attendees alike will continue to be charmed by the city’s multifaceted attractions, hotel operators and owners are likely going to experience lackluster results given the lack of strong topline growth.
Jan Freitag is the SVP of lodging insights at STR.
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.