September 11, 2018

ADR growth behaving differently than in past cycles

Despite peak occupancy, U.S. hotels are suffering from stagnant rate growth. STR data shows the “rate paradox” is affecting properties across chain scales and hurting new supply.

While U.S. hotels have enjoyed sustained occupancy peaks late into the current cycle, average-daily-rate growth is nowhere near as high as past cycles.

Carter Wilson, VP of consulting and analytics at STR and Jack Corgel, managing director of CBRE Hotels’ Americas Research, sought to determine if any data patterns emerge in U.S. hotels’ lack of pricing power during “The rate paradox: A historical analysis of ADR behavior” at last month’s Hotel Data Conference.

At the conference’s closing general session, panelists debated some of the causes of stagnant rate growth, like franchisees slashing rates to achieve high-occupancy incentives, loyalty programs, rate transparency and the fight against online travel agencies and alternative-accommodations platforms.

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