Quarter to quarter the traffic to hotels on a global basis varies but generally we have seen a positive trend indicating a vibrant and healthy hospitality sector. Such activity is driven by business and pleasure travel but we also see distinct variation across types of travelers.
Recently, PWC released their latest numbers on historical and projected RevPAR growth and what we find is a gradual deceleration. Although there has been RevPAR increases in 112 of the last 115 months, the data is starting to show weakening pricing power. The most recent quarter RevPAR growth came in at 0.7 percent, which was below expectations. One contributing factor was the growth in supply outpacing demand.
For 2020, PWC is predicting continued supply growth at the long term average of 2%. In terms of occupancy rates, the most recent estimates show the measure is slightly down at 65.9%.
Delving a bit deeper into the health of the hotel sector we find that at the Luxury segment, RevPAR improved by 1%, while the midscale segment saw the most severe decline – it was down nearly 1%. Notably, independent hotels are fairing well with RevPAR increasing 1.4%, which is expected to continue into 2020.
While the U.S. economic outlook remained mix in the third quarter, there was modest to slightly softening sentiment in the hotel sector.
