U.S. hotels are expected to continue their strong financial performance in 2017, but thanks to unexpected drivers.

According to CBRE's March 2017 Hotels Americas report, RevPAR grew for a seventh consecutive year in 2016. The biggest gains in revenue came from independent and economy chain-affiliated properties.

Smaller markets are also responsible for the industry’s strong showing. The report says hotels in the top 60 markets notched RevPAR increases of 2.8% in 2016, but the number is forecast to drop to 2% for 2017. Hotels outside of those regions saw higher gains of 3.6% last year and are expected to grow to 3.8% this year. Increased competition from a high number of new hotel rooms hitting central business districts is partly to blame for the lackluster urban performance.

“Over three-quarters of the new hotel rooms forecast by CBRE to enter the U.S. lodging industry in 2017 will be located in the 60 major markets we track, even though these markets represent just 48% of the overall national hotel inventory,” said John Corgel, professor of real estate at the Cornell University School of Hotel Administration and senior adviser to CBRE Hotels’ Americas Research.

“The increased competition in major markets certainly helps explain why these markets have recently lagged in RevPAR growth and are expected to continue to suffer in the near term.”