In the second quarter, the hotel industry revealed a stark divide: luxury hotels thrived on high-end demand, while budget and midscale properties struggled with weakening performance and shrinking profit margins.
According to data from CoStar, U.S. hotel revenue per available room (RevPAR) is projected to decline slightly by 0.1% this year. However, this average masks significant disparities. Luxury hotels saw RevPAR increases between 3% and 7%, while economy hotels experienced declines ranging from 1% to 3% across major brands.
Key Takeaways from Q2 Earnings of the Top 7 Public Hotel Companies:
– Diversification Matters: Hotel groups with a broad international footprint and a mix of property types generally reported stronger RevPAR performance.
– Development Remains Strong: Despite overall RevPAR challenges, hotel development pipelines remain robust.
– Loyalty Programs Drive Value: Customer loyalty programs continued to play a critical role in supporting business performance.
Signs of Slowing Growth
Companies focused primarily on the U.S. market reported flat or slightly negative RevPAR results. In contrast, those with significant international operations fared better. About half of the top seven publicly traded hotel companies revised their full-year forecasts downward for both RevPAR and EBITDA.
CoStar’s STR division delivered sobering news: over the past quarter, the U.S. hotel industry saw virtually no growth. For the first half of the year, RevPAR in the U.S. increased by just 0.8%. Based on recent trends, CoStar has adjusted its full-year RevPAR forecast to a slight decline of 0.1%.
The data reflects a bifurcated market, where luxury continues to shine while the lower end of the spectrum faces mounting pressure.
Source: skift.com