Measured Optimism the Day-One Theme at the 2017 Hotel Data Conference
Performance indicators for the U.S. hotel industry remain strong, and there are no signs of a pending downturn even with the current climate of political and economic uncertainty, according to Thursday morning general session panelists at the sold-out 2017 Hotel Data Conference.
Co-hosted by STR and Hotel News Now at the Omni Nashville Hotel, the Hotel Data Conference sold out for the fourth consecutive year with a record 626 attendees.
“The industry continues to expand, albeit slowly,” said Elizabeth Winkle, STR’s chief strategy officer. “We must remember that the smallest rate of growth is still growth.”
Winkle noted that 2017 was expected to be the year of supply growth and cited several key data points on the current state of the industry:
- As of June, all industry key performance indicators were at record highs, including occupancy at 65.1% and average daily rate at US$125.50.
- 2016 inflation-adjusted revenues surpassed the previous high set in 2000.
- New supply in the Top 25 Markets has grown 2.5% in aggregate.
- 16 of the Top 25 Markets recorded supply growth larger than the long-term U.S. average (+2.0%). Historically when supply growth reaches 1.8% in a market, occupancy begins to decline.
- Seven markets have seen supply growth above 3.5%: Denver, Nashville, New York City, Miami/Hialeah, Minneapolis/St. Paul, Oahu Island and Houston. Each of those markets, excluding Nashville and Houston, have grown demand faster, mitigating performance declines.
Adam Sacks, president of Tourism Economics, indicated that the U.S. economy is on relatively good footing and the greatest uncertainty is on the policy front.
“We’re seeing the global economy pick up steam. Emerging markets are absolutely leading the way,” Sacks said. “2017 is where we’re beginning to see that lift. We’re not into robust growth categories, but we’re seeing developing economies.”
In addition, Sacks highlighted three reasons the growth expectations of the hotel industry are still so muted:
- Very weak income growth, while at the same time, consumer spending has been outpacing income growth, pushing the savings rate down;
- A reluctance to raise interest rates; and
- Strength of the dollar.
“U.S. consumer markets and corporate markets are both on pretty solid footing,” Sacks said. “We don’t see anything in leading indicators or fundamental issues with the U.S. economy or interest rates that would cause us to be concerned about a recession in the near-term horizon.”
Amanda Hite, STR’s president and CEO, revealed the company’s revised U.S. forecast for 2017 and 2018 during a panel with Mark Woodworth (senior managing director for CBRE Hotels’ Americas Research) and Gerry Chase (president and COO of New Castle Hotels & Resorts).
Overall, the two-day HDC event includes four general sessions, 16 breakout panel sessions, 18 “data dash” sessions and 10 advanced-level “data dive” discussions. All told, the conference will feature approximately 970 minutes of data.