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U.S. Hotel Revenue Growing, but Slowing

ATLANTA — U.S. hotel revenue is slowing down, while expenses are on the rise, according to CBRE Hotels America’s Research’s 2016 edition of Trends in the Hotel Industry, released May 24.

According to the report, operating performance continued to improve in 2015, but at a much slower pace. Trends is the firm’s annual survey of operating statements from thousands of hotels across the U.S.

“After five years of strong increases in occupancy, average daily rate and profits, U.S. hotels reached the top of the current business cycle in 2015,” said Mark Woodworth, senior managing director of CBRE Hotels’ Americas Research. “Therefore, it is not a surprise that total operating revenues grew just 5.3 per cent from 2014 to 2015. What stands out as a concern for hotel owners and operators was the 4.7 per cent increase in expenses, especially during a year when inflation was just 0.1 per cent.”

From 2014 to 2015, 56.9 per cent of the hotels in the Trends sample posted an increase in occupancy, down from the 70-plus per cent marks posted the prior few years. “This clearly is an indicator that hotels are approaching the top of the cycle when occupancy is at near-capacity levels, and in certain markets, the negative consequences of new supply growth are being felt,” said Woodworth.

In the sample, 86.1 per cent of properties were able to raise their room rates during the year, while 80.5 per cent of the hotels were able to enjoy an increase in revenue per available room (RevPAR). On average, the Trends sample achieved a RevPAR gain of 4.6 per cent.

“In 2015, we saw continued improvement in the growth of other hotel revenue sources beyond the rental of guestrooms. During the year, food and beverage revenue rose by a healthy 6.6 per cent, while miscellaneous income (former rentals and other income) grew by 25.4 per cent,” Woodworth added.

Due to the strong growth in other revenue sources, total operating revenue for the overall sample increased by 5.3 per cent, from 2014 to 2015.

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