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U.S. Hotel Sector Has One Of Its Strongest First Quarters On Record

Hotel room, hotel industry

U.S. hotel performance was strong in Q1 year-over-year, boasting positive occupancy gains and a jump in RevPAR.

Hotel occupancy rose 0.9% to 61.1% in Q1 from a year ago, average daily rates (ADR) jumped 2.5% to $124.47 and RevPAR (revenue per available room) increased by 3.4% to $75.92 for the quarter, according to recent STR data. STR senior vice president of operations Bobby Bowers said this has been one of the sector’s strongest first quarters on record thanks to robust growth experienced in each metric and a favorable beginning of the year that included events that drove demand, such as Easter, the presidential inauguration and the 2017 Women’s March.

New supply continues to be a thorn in the industry’s side. Supply growth increased 1.9% for the quarter, signifying the largest jump in supply for any quarter since Q2 2010.

“As demand growth becomes more moderate, occupancy will decline, placing further pressure on pricing power,” Bowers said. “At any rate, muted ADR growth will continue to push modest RevPAR growth for the foreseeable future.”

Hotels within Washington, DC-Maryland-Virginia posted the quarter’s only double-digit increase in RevPAR, with other top-performing markets including Detroit, Seattle and New Orleans. Norfolk-Virginia Beach experienced the strongest occupancy gains, but despite the presence of Super Bowl LI, Houston saw the largest drop in occupancy for the quarter, down 3.2% to 63.7%.