|January 29, 1999 - Smith Travel Research (STR) announced 1998 fourth
quarter and lull calendar-year performance results for the U.S. lodging
Fourth quarter 1998 industry occupancy was 58.5 percent, a decline of 0.3 percent versus the same period in 1997. Average room rate gained nearly 4 percent to $78.49 in the quarter and revenue per available room (REVPAR) the combination of occupancy and average room rate and a key industry productivity measure --- increased 3.5 percent to $45.95.
Industry room supply (room nights available) increased by 3.8 percent in the quarter, which tied 1997 as the highest fourth quarter room supply growth since 1988. Supply growth, while overall higher than 1997, has shown signs of slowing from its peak earlier in the year due to the recent shortage of available capital for new development. Industry demand (room nights sold) increased 3.5 percent versus 2.8 percent during fourth quarter 1997. Room revenue grew over 7 percent, a decrease from the 9 percent achieved the same period in 1997.
For full year 1998, industry occupancy slid another 0.8 percent to 64.0 percent and average room rate grew 4.4 percent to $78.62. REVPAR gained 3.6 percent to $50.29. The 1998 industry occupancy decline of 0.8 percent was slightly less than the 0.9 decline last year.
Industry room supply grew 4.0 percent, significantly higher than the 3.5 percent supply growth in 1997. Demand gained 3.1 percent in 1998, also much higher than the 1997 growth of 2.4 percent. Room revenue for the industry was over $67 billion in 1998, an increase of nearly 8 percent over 1997.
Among the largest 25 U.S. hotel markets, New York City was again the leader in occupancy during 1998. (See attached table) Demand increased nearly 1.6 percent as supply grew only 0.5 percent and occupancy climbed to 81.3 percent. Room rates increased over 9 percent to more than $180, easily the highest absolute average room rate among the top 25 markets. REVPAR gained over 10 percent. The next highest occupancy market was San Francisco at 78.7 percent; however, that occupancy was 1.4 percent lower than last year. Only six of the 25 largest markets experienced occupancy gains in 1998.
"Room supply growth continued to increase significantly in 1998 at 4.0 percent. However, demand growth, while considered strong at 3.1 percent, was not able to keep pace with supply," said Randell A. Smith, CEO of Smith Travel Research. "As a result, occupancy levels slipped slightly and room rate growth slowed to 4.4 percent." Furthermore, Smith points out "We expect to see similar patterns in 1999, but supply growth should continue to slow and room rate growth will still exceed the general rate of inflation."
"We gained some additional insights into industry performance during 1998," continued Smith, "when we started receiving and analyzing data covering the weekday periods (Sunday through Thursday) and weekend periods (Friday and Saturday)." "In fact," explains Smith, "we were surprised to find that weekend room occupancy overall was better than that of weekday performance." In addition, Smith said, "it appears that the demand during the two-day weekend period is growing faster than the weekday period." According to STR, for the twelve months ended November 1998 (the latest weekday/weekend figures available), room occupancy for the Friday Saturday period was 67.5 percent compared with 62.6 percent for Sunday through Thursday nights. Demand was rising at a rate of 6.2 percent on weekends versus only 1.8 percent for the weekday period, and REPAR was increasing at 4.4 percent compared with 3.6 percent.
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 and has just launched a worldwide program to obtain hotel performance data on a global basis with its alliance partner, PricewaterhouseCoopers.
|Lodging Outlook Survey for the Year Ending December, 1998|
||Occupancy Percent||Average Room Rate||Room Revenue||Rooms Available||Rooms Sold|
|1998||1997||% Chg||1998||1997||% Chg||% Chg||% Chg||% Chg|
|Anaheim - Santa Ana, CA||65.1||67.5||-3.6%||79.48||75.37||5.5%||2.3||0.6||(3.0)|
|Los Angeles - Long Beach, CA||69.3||68.7||0.9%||88.59||82||8.0%||10.3||1.3||2.1|
|Miami - Hialeah, FL||70.3||71.6||-1.8%||101.77||94.77||7.4%||7.5||1.8||0.1|
|Minneapolis - St. Paul, MN||68.9||68.5||0.6%||79.06||76.36||3.5%||12.8||8.3||8.9|
|New Orleans, LA||68.3||69.3||-1.4%||108.78||104.64||4.0%||8.3||5.7||4.2|
|New York, NY||81.3||80.3||1.2%||180.01||165.01||9.1%||10.9||0.5||1.6|
|Norfolk - Virginia Beach, VA||59.3||57.3||3.5%||66.7||64.67||3.1%||7.7||0.8||4.4|
|Oahu Island, HI||72.3||77.2||-6.3%||112.88||113.28||-0.4%||(6.7)||-||(6.4)|
|San Diego, CA||72.7||71.4||1.8%||97.72||86.26||13.3%||16.2||0.6||2.5|
|San Francisco, CA||78.7||79.8||-1.4%||128.82||117.74||9.4%||7.9||(0.1)||(1.4)|
|St. Louis, MO-IL||62.2||62.9||-1.1%||69.37||68.81||0.8%||4.6||5.0||3.7|
|Tampa - St. Petersburg, FL||64||65.3||-2.0%||77.68||73.35||5.9%||9.5||5.5||3.4|
|Washington DC, MD-VA||70.4||70.6||-0.3%||105.05||100.11||4.9%||7.0||2.3||2.0|
|Also See:||First Half 1998 US Lodging Industry Results Released by Smith Travel Research Lodging Outlook Survey for the 6 Months June 1998 Compared with June 1997|
|U.S. Lodging Industry's 1997 Profits Much Higher Than Originally Thought / Smith Travel Research / July 1998|