Are we at the peak? Yes, we are, and on the down slide of this slippery slope.
History has shown that, during an election year, spending habits become unpredictable, and this applies to personal travel and business travel habits.
What does that mean for your group business strategy? Our advice is go all in on group for the next 18 months.
You may have to sacrifice in a little in rate and concessions to close the business but in the end having this group base built will allow more options for revenue management.
Current stability has occupancy levels stabilized and average daily rate is the primary driver of still meaningful, albeit decelerating, RevPAR growth.
While overall demand conditions in the US are expected to remain favorable, driven, in part, by firming group travel, increasing supply growth in many markets.
Demand growth is expected to slow in 2017. As a result, our outlook anticipates occupancy levels to decline, but still remain near peak levels.
Average daily rates are expected to continue to grow, although at a decelerating pace, driving a more modest RevPAR increase of 3.7%.
Driven by a number of factors, including solid labor market gains, stronger consumer spending, accelerating housing activity, and low inflation rates, partially offset by constraints on business investment.
Risks to the US economy appear to be tilted to the downside. While domestic fundamentals appear strong, international headwinds and policy uncertainty related to the presidential election appear to be the biggest downside risk factors.
For 2017, STR projects the U.S. hotel industry to post a 0.2% increase in occupancy to 66.1%, a 4.3% rise in ADR to $130.63 and a 4.5% increase in RevPAR to $86.28.
Demand growth in the U.S. has outpaced supply growth each year dating back to 2010.
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