The evolution of US hotel RevPAR growth over 100 months
 
The evolution of US hotel RevPAR growth over 100 months
25 JULY 2018 7:27 AM

The U.S. hotel industry posted revenue per available room of $56.80 in March 2010 and it’s up to $98.85 in June 2018. Take a look at how industry KPIs have evolved over the past 100 months of year-over-year RevPAR growth.

HENDERSONVILLE, Tennessee—The current revenue-per-available-room recovery started in March 2010, and since then RevPAR has grown uninterrupted. RevPAR has increased from $56.80 back then to $98.85 in June 2018.

Let’s take a quick look at the key performance indicators for the U.S. hotel industry to see how they have evolved over the last 100 months.

Supply
The industry increased its property count from 50,935 to 55,689 and added some 479,000 rooms in the last 100 months. Not surprisingly the largest increase in room count stemmed from the limited-service hotels, mostly branded, in the upscale and upper midscale chains.

Here are the supply changes by class:

Even though we observed strong or very strong growth in most chain classes, the economy segment actually lost ground.

Demand
In the 100 months period, 9.5 billion roomnights were sold. The rolling 12-month average of room demand was 1.73 billion roomnights. Now this metric stands at 1.88 billion, an increase of 148 million nights. In other words, on average the U.S. hotel industry today sells 12 million more roomnights each month than 100 months ago.

Revenue
As supply and demand have increased, so has room revenue. Here is a big number: Over the last 100 months, the industry generated $1 trillion in rooms revenue.

In June, Hotel News Now News Editor Sean McCracken shot this quick video at HSMAI’s 2018 Revenue Optimization Conference that I think shows some great viewpoints. He asked attendees of that conference what reaching 100 months of RevPAR growth means to them. Check it out below:

Occupancy
The rolling 12-month occupancy in March 2010 was the second lowest we ever recorded (54.4%). So almost half the hotels stood empty in the prior year as the Great Recession took hold. Today, the 12-month moving average occupancy registers new records each month and in June stood at an all-time high of 66.2%. So, the industry has never sold more rooms than today, and hoteliers never reported fuller hotels.

ADR
Of course, room rates are higher today than they were eight years ago. But hotel rooms got more expensive, more quickly than other consumer goods. The compound annual growth rate of the Consumer Price Index over the period was 1.8%; for hotel ADR the increase was 3.5%. And in absolute ADR terms, a room cost $97.15 back in March 2010 and $128.27 in June 2018, a full 32% higher.

RevPAR
Taking this all together—because of the combined strong increases in ADR and occupancy—RevPAR soared 60% from $53.25 to $84.98 at a compound growth rate of just around 6%.

Looking back at this extraordinary run in increasing hotel prices and room demand proves that the industry was and is very resilient to outside shocks. While the immediate demand impact on travel and tourism by an outside shock is very impactful, recovery is always imminent and can then even spark a long up-cycle just as the one we are living in now.

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.

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