More interesting insights from the Hotel Data Conference on the top 25 U.S. hotel markets in terms of supply and what to expect in the future.

Published by:  Danielle Hess  and  Dan Kubacki/Hotel News Now
Published date: August 2019

Supply growth has taken a toll on some top 25 markets, while factors in some markets beyond the top 25 make them good locations for hotel development.

In two sessions at the Hotel Data Conference, data experts from STR, HNN’s parent company, offered some perspective on the performance and potential in the top 25 markets and beyond.

On a 12-month moving average, supply growth for these markets has sat at 2.6% since August 2018, while demand hit a high point of 3.8% in the same month before dropping to 1.3%, he said.During the “Top 25 markets: Best performances in a leading role” presentation, Brad Garner, SVP of client services and relationships at STR, said performance for top 25 markets is at a tipping point, with a lot of uncertainty around international inbound travel arrivals, the strength of the U.S. dollar, inflation, the political climate and trade wars, and calendar event comparability.

“Make no mistake about it; (demand growth) is declining and is right above that 1.3% right now,” Garner added.

Somewhat skewing those demand numbers are one-time events in certain markets, such as an early government shutdown in Washington, D.C., and a royal visit by Britain’s Prince Harry to New York City in the summer of 2018, he said.

2019/2020 forecast

STR forecasts RevPAR growth among the top 25 markets by placing cities into three categories: Negative, flat to CPI and growth, according to Kwabena (Kobe) Akuffo Owoo, operations analyst at STR.

Here’s where some markets in the top 25 stand in terms of RevPAR growth for 2019 and 2020.

Growth
Miami is hosting the Super Bowl in 2020, which should lead hoteliers to raise rates around the event, Owoo said. As a result, STR anticipates RevPAR growth of around 6% in the market for 2020.

Atlanta, which hosted the Super Bowl in 2019, “saw a lot of demand come into the market, and (hoteliers) were able to raise rates significantly,” he said.

Atlanta is “actually the highest forecasted market for 2019 at 5.8% (RevPAR growth),” he said.

Flat to CPI
Denver has seen a lot of supply move in, but there’s also been a lot of demand growth in the market, Owoo said, adding that STR placed the market in the flat to CPI category for 2019 and 2020.
Denver, which has added approximately 100,000 hotel rooms every year since hosting the Democratic National Convention in 2008, “is the beneficiary of a lot of influx of people for both group and transient activities,” he said.

Phoenix is another market expected to be in the flat to CPI group for 2020, with demand growth that is on par with Denver, Owoo said, “but not a lot of rate growth.” Rate growth is projected at 1.2% to 2.5% next year.

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