The U.S. lodging industry Today

Abstract

An analysis of Smith Travel Research's database of 35,000 hotels shows a general deceleration in the rate of growth of room revenue per available room (RevPAR). Although construction of new hotels is beginning to slow, the expected opening of more than 140,000 new rooms in mostly limitedservice and extended-stay properties will continue to be a drag on RevPAR in the face of static or declining demand. Operators of high-price hotels seem to be in a strong position, since their share of demand showed an impressive increase in 1998 and is expected to continue to grow. Most of the hotels built in the past five years are, on average, under 150 rooms in size and are located in suburban markets, near highways, or in small towns. Change in consumer demand has not kept pace with those developments, however, especially in the case of highway properties, which have lost market share to suburban locations. Although the industry remains strong in the near term, prospects may be dimming. The number of rooms is expected to continue to rise at a rate of nearly 4 percent annually, while the customer base has expanded at only 1 percent a year for the past ten years.