Looks like the hotel industry is recovering from its slump. According to research by Smith Travel Research and analysis by advisory firm PwC, revenue last year grew by 8.2%. This year, it is expected to increase by 6.5%. Next year, the growth is expected to be at 5.6%.
The report also stated that in the first quarter of the year there were more bookings by international visitors and for corporate meetings.
The supply for lodging is expected to increase to 0.4%, while the demand will grow at 2.5%. At this rate, the occupancy levels may reach 61.3%, the highest level since 2007. The average daily rate gains in the first quarter will give hotels the confidence they need to raise their room rates.
Data also shows that average daily rates have climbed as high as in the pre-recession. For business travelers, the rates climbed to 9.3%, while leisure travel rates jumped 7.3%.
The report also stated that hoteliers are no longer making the same mistake they did in 2001 and 2008, where they slashed rates when the number of bookings went down. Instead, they strive to maintain the quality of their product. With bookings growth and rate growth put together, corporate revenue in the industry has increased by double digits in the last five years.
Another sign of the recovery and growth of the hotel industry is the increase in hotel deals. Also, the report predicts that several hotels with be bought and sold this year—which means that the transaction market will likely be active in the next six months.
During the New York University International Hospital Industry Investment Conference, the future of the industry is something that hoteliers are cautiously optimistic about. The main cause of worry is the outlook of the European hotel industry, because of its political situation. Still, there’s reason to hope that business performance will remain strong.