Last year, compression nights, defined as nights when hotel occupancy is greater than 95 percent, fell 17 percent year over year among the 25 U.S. markets with the most hotel rooms, the first time that's happened since 2009.
Additionally, though occupancy remained more than 1 percent higher in 2016 than in 2014, compression nights dipped 8 percent below 2014 levels. "This would suggest that there are other factors impacting hotels' ability to fill during busy times," the report states.
Because of the premium rates hoteliers can charge during periods of high occupancy, compression nights represent a significant source of profit for the industry. According to the report, compression nights comprised only 3 percent of total room nights last year but made up 8 percent of hotels' profits. Nights when occupancy was greater than 90 percent made up 11 percent of total room nights and generated 28 percent of hotels' profits.
But are Airbnb and its counterparts to blame for fewer compression room nights? The signs point to yes, according to Morgan Stanley. In another report—titled Who Will Airbnb Hurt More—Hotels or OTAs? ... One Year Later - Morgan Stanley found that Airbnb use rose from 12 percent of travelers in 2015 to 18 percent in 2016. That trend, the firm says, is expected to continue in 2017.
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