Trends

February Online Room Rates Are Down 6.4% from a Year Ago

e-forecasting.com

Hotel room rates in the top-25 most popular U.S. destinations average $213.85 this February, down from $214.06 in January, according to hotel online room rates derived from real time global multi-provider database of reservations maintained by e−forecasting.com. The U.S. average online room rate (e−Room Rate ®)¹ - the world's best predictive analytic for info about now as compared to the past - and hoteliers' only tool for "predictive benchmarking ®", ranges among the top-25 destinations from a high of $391 to a low of $131 this February. Based on industry surveys, e−forecasting.com estimates that in 2018 about 75% of all reservations are made online via brand websites and travel agent merchant websites, compared with only one-fourth nine years ago.

Table - US Hotel Business Analytics

On year-over-year basis, the U.S. average online room rate is now down (−6.4%), this February, from a year ago, which is lower than the previous month's year-over-year growth rate of (−0.5%). This February, the average online room rate in San Francisco, despite a dip of (−7.8%) from last year, hit $391 a night, making the city the most expensive destination among the top-25 U.S. hotel markets.  San Jose takes the second place now, in February, with an online room rate at $363, after a drop of (−1.0%) from a year ago. In Los Angeles, the online room rate in February is now growing (+10.2%) from last year to $290 a night, ranking the city in the third place of the most expensive destinations in the United States.

Table - Top 25 US DestinationsAt the bottom of the list, the three least expensive, or most affordable, cities to visit this February are: Chicago hitting a monthly online room rate of $139 a night, after a (−0.2%) change from a year ago; Minneapolis posts now an online room rate of $134, following a (−6.1%) change from last year; and lastly,  the most affordable popular destination in the country is now St. Louis with an online room rate of $131, after a nil change from a year ago. With a median online room rate of $198 amongst the top-25 most popular U.S. destinations, Seattle is placed to be the country's average affordable city to visit this February.

Moving from data to Hotel Biz Analytics ®, e−forecasting.com's Smoothed Seasonally Adjusted (SSA)² predictive analytic, which measures the so called (underlying) trend in online room rates, posts $239.35 this February.  On a month-over-month basis - the hoteliers' predictive analytic for tracking what's now and not what's the past - "estimates the national trend in online room rate this February to have declined (−0.5%) from the previous month, which is the same percent change as in January", said Evangelos Simos, editor of predictive analytics databases and professor of economics at the University of New Hampshire.

Combining the demand-driven trend effect with the market-specific periodic effect, e-forecasting.com offers hoteliers unparalleled predictive intelligence to optimize both what's now and what's next "predictive benchmarking ®". "Looking at the top-25 hotel destinations, the month-to-month percent change in the trend of online room rates in February ranges from a high of (+1.2%) in Salt Lake City to a low of (−1.8%) in New Orleans. Amongst the top-25 destinations, the trend (SSM) in online monthly room rates is growing in 12 cities; and is falling or staying flat in 13 cities," Simos added.

"Looking at profitability, hoteliers' ultimate gauge for decision-making, profits per available room (e−ProfitPAR ®) are down (−8.6%) on a year-over-year basis in February", said Maria Sogard, CEO at e-forecasting.com. e−ProfitPAR is the result of changes in two predictive analytics: the online revenue per available room, e−RevPAR ®; and e−forecasting.com's estimate of hotel unit (per room) cost, e−Unit Cost ®, derived from prices of all relative contributing inputs - including wages - which are mined in real time from hundreds of internet databases. "In our previous month's report, January 2018, year-over-year percent change in e−ProfitPAR posted a reading of (−3.2%). In a longer perspective last year, February 2017, year-over-year percent change in e−ProfitPAR posted a reading of (−1.8%). Using real time e−RevPAR for the top-25 U.S. destinations and market-centric e−Unit Cost index, year-over-year percent change in e−ProfitPAR range from a high of (+12.4%) in San Diego to a low of (−28.5%) in Houston in February. Amongst the top-25 destinations, predictive analytics on e−ProfitPAR are up in 8 cities; they are down or are flat in 17 cities.

On tracking monthly the risk of business losses from online reservations, e−forecasting.com uses sophisticated econometric techniques to estimate the probability for room related losses (negative profits), when room revenues are not sufficient to meet room costs, in each of the 25 destinations and the national economy. For U.S. hoteliers, the probability of losses is forecast to have hit 100% this month - February, which is the same as in January. In the top-25 hotel destinations, the risk for hoteliers being in a period of business losses per room - from online reservations - this February, ranges from a high of 100% in Washington D.C. to a low of 1% in Salt Lake City. "The predictive analytic for business losses per room is above 50% in 15 cities out of 25 cities; it is 50% or below in 10 cities," Maria added.

HOTEL BIZ ANALYTICS

Moving from data to Hotel Biz Analytics ®, e−forecasting.com's Smoothed Seasonally Adjusted (SSA)² predictive analytic, which measures the so called (underlying) trend in online room rates, posts $202.17 this January.  On a month-over-month basis - the hoteliers' predictive analytic for tracking what's now and not what's the past - "estimates the national trend in online room rate this January to have declined (−0.1%) from the previous month, which is the same percent change as in December", said Evangelos Simos, editor of predictive analytics databases and professor of economics at the University of New Hampshire.

Combining the demand-driven trend effect with the market-specific periodic effect, e-forecasting.com offers hoteliers unparalleled predictive intelligence to optimize both what's now and what's next "predictive benchmarking ®". "Looking at the top-25 hotel destinations, the month-to-month percent change in the trend of online room rates in January ranges from a high of (+1.6%) in Salt Lake City to a low of (−1.5%) in Detroit. Amongst the top-25 destinations, the trend (SSM) in online monthly room rates is growing in 12 cities; and is falling or staying flat in 13 cities," Simos added.

HOTEL PROFITABILITY

"Looking at profitability, hoteliers' ultimate gauge for decision-making, profits per available room (e−ProfitPAR ®) are down (−2.3%) on a year-over-year basis in January", said Maria Sogard, CEO at e-forecasting.com. e−ProfitPAR is the result of changes in two predictive anaytics: the online revenue per available room, e−RevPAR ®; and e−forecasting.com's estimate of hotel unit (per room) cost, e−Unit Cost ®, derived from prices of all relative contributing inputs - including wages - which are mined in real time from hundreds of internet databases. "In our previous month's report, December 2017, year-over-year percent change in e−ProfitPAR posted a reading of (+2.7%). In a longer perspective last year, January 2017, year-over-year percent change in e−ProfitPAR posted a reading of (−1.2%). Using real time e−RevPAR for the top-25 U.S. destinations and market-centric e−Unit Cost index, year-over-year percent change in e−ProfitPAR range from a high of (+24.0%) in Salt Lake City to a low of (−13.6%) in San Francisco in January. Amongst the top-25 destinations, predictive analytics on e−ProfitPAR are up in 11 cities; they are down or are flat in 14 cities.

On tracking monthly the risk of business losses from online reservations, e−forecasting.com uses sophisticated econometric techniques to estimate the probability for room related losses (negative profits), when room revenues are not sufficient to meet room costs, in each of the 25 destinations and the national economy. For U.S. hoteliers, the probability of losses is forecast to have hit 95% this month - January, which is higher than December's reading of 91%. In the top-25 hotel destinations, the risk for hoteliers being in a period of business losses per room - from online reservations - this January, ranges from a high of 100% in Philadelphia to a low of 1% in Seattle. "The predictive analytic for business losses per room is above 50% in 16 cities out of 25 cities; it is 50% or below in 9 cities," Maria added.

Graph - Probablity of U.S. hotel industry entering a recession

About e-forecasting.com

Founded in Durham, NH in 1994, e-forecasting.com is a predictive intelligence consulting firm offering to clients customized solutions for what’s next. For over 20 years, its hotel insights division has focused on hotel predictive analytics and forecasting products for the top destinations around the world to enhance its clients competitive advantage and improve their bottom line.

Notes and Exhibits

¹The e−Room Rates are a snapshot (real time estimate) of the monthly online room rate for the world's most popular destinations on the basis of millions of daily inquiries for hotel room rates to hundreds of online travel agents, hotel chains and websites of single properties.

²For each market, e-forecasting.com adjusts each e−Room Rate ® to seasonally adjusted and smoothed (SSA)  hotel-biz-analytic, also called  trend, using the BLS methodology comprised of two statistical approaches for seasonality: the model-based Signal Extraction in ARIMA Time Series (SEATS) or the non-model-based X-12 adjustment; and, the Henderson smoothing technique using the minimum mean square error revision for the end points.

³For each market, e-forecasting.com generates monthly - starting in 1969 - unit cost or cost per room index, a hotel-biz-analytic consisting of three analytics: a raw (actual) cost per unit index as a weighted average of operational costs in "purchasing' all inputs from wages to utilities, repairs to several types of professional services; and two variants of the cost index: a seasonally adjusted (SA) cost index and a trend cost index which smooths out the seasonally adjusted index (SSA).

Copyright © 2018 e−forecasting.com. All rights reserved. e−forecasting.com®,  [ϵ-chart logo]®, Hotel Biz Analytics ®, Predictive Benchmarking ®, e−Room Rate ®, e−RR ®, e−RevPAR ®, e−ProfitPAR ®, e−Unit Cost ®, are registered trademarks of e−forecasting.com, respectively. 

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