2018: A Year of Growth and Profitability for Hotels
February 11, 2019 2:47pm
By Fran Worrall, Hospitality Upgrade Editor
Major brands saw increases in occupancy and ADR, along with expansion across the globe
As 2017 came to an end, many industry forecasters predicted that the coming year would be a good one for hotels. And, for the most part, they were right. A strong economy, rising employment and higher consumer net worth translated into more travel (for both business and pleasure) as well as higher transaction volumes in 2018.
Leading independent investment research firm Zacks reports that hotels saw increases in both occupancy and average daily rate (ADR) in 2018. As early as the first quarter, the industry witnessed a better-than-expected rise in demand, with revenue per available room increasing by 3.5 percent.
According to data benchmarking firm STR, the industry is projected to report a 2018 year-end 0.4 percent increase in occupancy, a 2.6 percent increase in ADR and a 3.0 percent increase in revenue per available room as compared to the previous year. And, while occupancy increased across all segments, the luxury segment is expected to post the highest growth rates.
Many hotel companies, including major brands Hilton, Hyatt, IHG and Marriott, reaped the benefits of this good year. Here, Hospitality Upgrade recaps just a few of 2018’s highlights.
Hilton announced a new brand
Hilton, headquartered in McLean, Va., achieved record-breaking growth in 2018, adding more than 450 properties to surpass 5,600 properties globally.
In October, the company announced the launch of a new lifestyle brand, Motto by Hilton. The brand will include a carefully curated portfolio of properties in the world’s most desirable urban neighborhoods; but, unlike traditional hotels, Motto’s guestrooms will be smaller (an average of only 163 square feet) and more economical, with multi-functional furniture, wall beds and segmented shower and toilet stalls. Guests can book multiple connecting rooms and even split payments among multiple people at the time of booking. Hilton says the idea behind the brand is to enable guests to travel to destinations they didn’t think they could afford.
In other Hilton news, the company opened its 1000th All Suites property and expanded its luxury portfolio with the launch of LXR Hotels & Resorts and the openings of Waldorf Astoria properties in Atlanta, Bangkok and Las Vegas.
Hyatt sold a few properties, opened others
In early 2018, as part of its ongoing capital strategy, Chicago-based Hyatt sold three of its hotels — Andaz Maui at Wailea Resort, Grand Hyatt San Francisco and Hyatt Regency Coconut Point Resort and Spa — for roughly a billion dollars. The company retained the properties’ management agreements.
At the same time, Hyatt announced the openings of new properties in Africa, Asia, Australia, Central America, Europe, North America and the Caribbean. And the company’s Hyatt Centric brand — created for millennial-minded travelers — enlarged its footprint, with hotels opening in Los Angeles, Philadelphia and Portland, Ore., bringing the Centric portfolio to 22 properties across seven countries.
Hyatt closed 2018 with its acquisition of Two Roads Hospitality, enabling the company to expand into 23 new markets. Two Roads Hospitality brands include Alila, Destination, Joie de Vivre, Thompson and tommie.
IHG relaunched upscale brand
For InterContinental Hotels Group, much of the focus in 2018 was on the fast-growing luxury segment. In March, the UK-based company announced the acquisition of a majority stake in Regent Hotels & Resorts, with plans to grow the portfolio from its current six hotels to more than 40 properties in resort locations and gateway cities around the world.
And, in June, IHG announced the launch of voco, its new upscale brand focused primarily on conversion opportunities. According to IHG, the concept, which combines the charm of an individual hotel with the reassurance of a global brand, will enable owners of high-quality individual and locally-branded hotels to drive higher returns by leveraging IHG’s technology capabilities and loyalty program. The voco roll-out will begin in the company’s Europe, Middle East, Asia and Africa region.
Despite a data breach, Marriott makes gains
Although the announcement in November of a massive Starwood data breach made headlines around the world, 2018 wasn’t all bad for Marriott International.
In fact, the hotel giant, based in Bethesda, Md., announced last month that it ended 2018 with a record global pipeline of 478,000 rooms. The company signed management and franchise agreements for 816 properties and opened nearly 500 properties across its portfolio. In the luxury segment, Marriott signed 29 properties across six brands, with plans for a Ritz-Carlton in Shanghai, a St. Regis in Dubai and a three-brand luxury project in the Dominican Republic.
The company also entered into a joint venture with China’s Alibaba Group, the world’s largest e-commerce company, with a goal of improving market share and expanding loyalty program membership. The venture enables Chinese travelers to book Marriott rooms through Alibaba’s website and use Alibaba’s payment app when staying at select hotels.
Also noteworthy . . .
Other hotel companies also fared well in 2018:
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