Auction.com Sees Hotel Sector Strengthening

IRVINE, CA—Auction.com has released its Q2 2015 Hotel Monitor Report, which details how increases in occupancy and room rates are sustaining healthy revenue per available room (RevPAR) in the hospitality industry even as expansion downshifts. Auction.com projects that occupancy will reach 73.7% between now and 2018 as room rate growth simmers down to a still-healthy mid-3%range. As a result, RevPAR growth will average 4.7% through 2018. “Supply and demand in the hospitality sector is playing out the way we’ve anticipated, and we continue to expect increases in occupancy over the next several years, regardless of the step back seen during Q2 2015,” said Peter Muoio, Ph.D., chief economist for Auction.com. “As expected, the supply pipeline remains moderate but increasing, while expansion appears to be shifting into a slower growth phase.”

Second-quarter room rates continued to rise, increasing a seasonally adjusted 1.6% and pushing average daily rates (ADRs) 4.8% above the year-ago total. Room sales fell on a seasonally adjusted basis for the first time since mid-2012, but remained 2.7% above last year’s level. The drop in room sales pulled industry revenue down 2.2% from Q1 (adjusted seasonally), but still 2.7% above what was reported a year ago. Seasonally adjusted vacancies slipped to 65.2% from their Q1 high of 65.5%.