Hotel Occupancies, Rent Growth Remain Strong, with a Positive Outlook for 2019

Average revenue expected to keep rising in 2019.

20 November 2018

Nrei

Hotels are doing better than ever. More rooms have been occupied in 2018 at higher rents than ever before.

"We are at peak performance—and we don't expect that to change much," says Jan Freitag, senior vice president of lodging insights for research firm STR.

Hotel owners still worry about the rising costs to operate their businesses, however. Even though the average revenue produced by hotel rooms is likely to keep rising, room rates are not growing as quickly as the cost of operations.

"The name of the game is cost control," says Freitag.

Demand for hotel rooms is still rising

Hotel rooms are full in cities and towns across the United States. Occupancy rates reached a cyclical high in 2018, according to Robin Trantham, a consultant with research firm CoStar Portfolio Strategy.

Over the 12 months that ended in September, occupancy across the U.S. averaged 66.7 percent. "We are selling two out of three rooms all year," says Freitag. "We are at the strongest demand level ever."

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