The US lodging industry appears to be at an inflection point, driven by a combination of decelerating demand as well as continued economic and global trade risks.
Recent weak performance and decelerating forward trends suggest a continued deceleration in top line performance through at least next year.
- Second quarter results came in significantly below expectations - with ADR levels up 1.2 percent, and occupancy levels down 0.1 percent, resulting in a tepid RevPAR increase of 1.1 percent.
- Mitigating a steep decline in group occupancy levels was mild growth in transient demand, as well as strong growth in the contract segment.
- Between flattening occupancy and an overall lack of pricing power, RevPAR grew at a modest level, as hotels traded occupancy for rate. US lodging performance continued to experience headwinds in July, characterized by anemic RevPAR growth.
- decelerating GDP growth
- softening in consumer spending.
- In 2020, lodging supply and demand growth are expected to moderate, resulting in a very slight decline in occupancy.
- Rising inflation levels are expected to support marginal growth in ADR, resulting in an expected RevPAR increase of 1.0 percent, the lowest in a decade.
- The above outlook is challenged by continued trade tensions and effects from tariff-rate implementation
- political uncertainty both domestically and abroad,
- slowing economic growth
- and pressure on inbound leisure travel from China due to the devaluation of the Yuan.
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