Third quarter 1997 industry occupancy was 71.2 percent, a decline of 1.0 percent versus the same period 1996. Average room rate gained 5.3 percent to $75.08 in the quarter and revenue per available room (REVPAR) --- the combination of occupancy and average room rate and a key industry productivity measure --- increased over 4 percent to $53.42.
Industry room supply (roomnights available) increased by over 3 percent in the quarter, higher than the 2.4 percent supply growth in third quarter 1996. Industry demand (roomnights sold) increased 2.1 percent, an increase of nearly one percentage point from third quarter 1996 demand growth. Room revenue grew almost 7.5 percent in the quarter, a decrease of over 1 percentage point versus the same quarter 1996.
For 1997 year-to-date through September, industry occupancy fell 0.9 percent to 66.5 percent and average room rate grew over 6 percent to $74.96. REVPAR gained over 5 percent to $49.86. September year-to-date industry occupancy declined for the first time since 1991.
Industry room demand grew 2.2 percent in the first nine months of 1997, a slight increase in demand growth versus the same period in 1996. Room supply increased over 3 percent, accelerating from supply growth of 2 percent September year-to-date 1996.
Among the largest twenty-five U.S. markets, New York was particularly strong in the first nine months of 1997. Demand increased over 3 percent versus prior year and occupancy climbed to over 80 percent. Room rates increased nearly 13 percent and reached over $161, the highest absolute room rate among the top twenty-five markets. Revenue per available room gained nearly 15 percent. In Atlanta, room supply increased over 10 percent while room demand grew less than 4 percent, resulting in an occupancy decline of over 6 percent for the nine month period through September.
"Room supply growth increased significantly in the first nine months of 1997 while demand growth has been moderate compared with same period 1996," said Randell A. Smith, CEO of Smith Travel Research. "As we move into the final quarter of 1997, we expect to see a continuation of current trends with somewhat lower industry occupancy and moderating room rate growth."
Smith Travel Research --- the leader in lodging industry tracking and analysis --- provides regular industry reporting to all major U.S. chains, many independent hotels, and a variety of management companies and hotel owners. The company also tracks lodging industry performance in Canada and Mexico.