US economy is looking good and the consumers are empowered by a more stable outlook towards the future. Riding high on this emerging confidence, top class American chain of hotels and hospitality giants like Hyatt Hotels Corp (H, Financial), Hilton Worldwide Holdings Inc. (HLT, Financial), Starwood Hotels & Resorts Worldwide Inc. (HOT, Financial) and Marriott International Inc. (MAR, Financial) have forecasted higher occupancy rates this year and are capitalising on it by increasing their prices by about 5% this year.
In an announcement on 5th May 2015, Hyatt confirmed the price revision buoyed by the prediction that group bookings will propel growth in 2015. This belief was endorsed by Lauro Ferroni, head of hotels and hospitality research at property consulting firm Jones Lang LaSalle who said that with a stable economic future, the trend would be to do group bookings in advance.
Occupancy predictions in the hospitality sector
Findings by the popular statistics portal, Statistica, revealed that the expected Occupancy rates in U.S. hospitality sector would increase from 63% in 2005 to 64.2% in 2015 with the luxury hotels benefitting the most with a predicted 65.1% occupancy rate. This escalation is attributed to the highest ever surge in the travel spending capacity of consumers in United States by 5.2%.
The analysts at PKF Hospitality Research are predicting a rise of 5.3% in the room tariffs this year and their senior managing director, Mark Woodworth said that the room rates are anticipated to cater for almost 75% of the calculated RevPAR that is the product of the hotel’s average daily revenue-per-room with its occupancy rate this year. The optimistic outlook is boosted by the expected 55% increase in RevPAR.
David Loeb, an analyst at the Robert W. Baird brokerage supported this approach saying that if hotels were sure they were going to be fully occupied, they could actually charge any amount for the last few available rooms and still be sure that consumers will grab it.
Earlier, Marriotts had declared a full year profit outlook based on the impressive 31% jump in quarterly profits and revised last year’s room rate averaging at $143.27 in North America with a 5% jump in 2015 and Starwood Hotels and Resorts Inc. also riding high on a better than expected profitable quarter welcomed people in US with higher room rates. In consistent trend, Hyatt Hotels Corp. experienced a strong RevPAR and higher occupancy with escalated daily rates averaging a high of 6% during the first quarter which according to its Chief Executive Mark Hoplamazian is the strongest ever since 2007. He voiced his optimism in a press release by saying that high group and transitory demand will drive the well performing hospitality sector in U.S.
Forthcoming hospitality
Speculation is high on whether the escalating room tariffs will pull down the occupancy rate in the long run with Woodworth even predicting a decline of 1.2% in 2016 -17. But so far this year, the Dow Jones U.S. Hotels Index has risen by 5.5 % overtaking the 2.7% rise in S&P 500 index. This bodes well for the hotel industry with Starwood announcing strategic alternatives and Hyatt planning on opening around 50 service hotels around the world especially in Asia and China this year.
