Data deep dive: Global hot spots and the lessons they hold


by Alicia Hoisington

In 2017, 75.1 million international travelers visited the United States, according to Statista. That number is expected to reach 78 million this year and climb to 89 million by 2022. And while the U.S. hotel industry is enjoying increased demand (+1.9 percent year-to-date July, according to STR), supply is also headed for a peak (+2 percent, YTD July). That’s why hoteliers need to take a look at what they can do to drive business by observing hot spots on a global level.

United States

Before looking globally, it’s important to have a pulse on what is happening at home – and hotel business certainly looks good in the U.S., bolstered by economic growth of 4 percent in the second quarter, according to Marcus & Millichap’s Midyear 2018 Hospitality Outlook report.

Occupancy has hit a 30-year high in the U.S., according to the firm, thanks to healthy room demand. That has helped to push revenue-per-available-room (RevPAR) growth, which is expected to outpace last year as the industry continues to be supported by a steady economy and a boost from tax-law changes.

As such, many of the major analysts have revised their forecasts upward for the U.S. hotel industry. In 2018, the U.S. hotels are projected to report a 0.6 percent increase in occupancy to 66.3 percent, according to STR. Average daily rate (ADR) is expected to grow 2.6 percent to $129.85, while RevPAR will increase 3.2 percent $86.09. Notably, STR data shows that RevPAR has increased by at least 3 percent each year for the past eight years.


Asia has been on everyone’s minds of late, especially as U.S.-China trade relations have been rocky at best. But, for the hotel industry, China offers an abundance of opportunity to capture demand from travelers who are always on the go. In 2017, three million Chinese travelers visited the U.S., according to Statista. By 2022, that figure is predicted to jump to 4.5 million.

To capture the demand from Chinese travelers, U.S. hoteliers must first understand the travel trends. Attract China, a digital marketing firm that focuses on outbound Chinese travel to North America, identified several main trends from this group:

  1. Travel is the average person’s top holiday choice. But that choice comes with a plan, as travel is usually not spontaneous. That means hoteliers marketing to Chinese travelers need to start the process as early as possible to win guests.
  2. Paid vacations encourage travel. In 2015, the Chinese government created a policy supporting paid vacations to stimulate domestic tourism and combat a downturn. This has helped to increase both domestic and international travel.
  3. Travelers want more customization. As in the U.S., Chinese visitors are looking for customization in their travel plans. Millennials here, too, are leading the charge. In a survey of Chinese millennials, keywords such as “adventure” and “road trip” were most prevalent.
  4. Mobile and digital are key. As technology continues to advance and internet access spreads in China, more people consider handheld devices essential to daily life. When marketing, hoteliers need to keep that top of mind and make sure their websites are mobile-friendly and their hotels have the latest tech.
  5. Themed experiences are still winners. Film and TV have a large influence on Chinese travelers and often help them decide where to visit. If a hotel isn’t in an area that a famous movie or show has been filmed in, then other examples of holiday themes hoteliers can capitalize on include: honeymoon, family fun and refreshing summer. Additionally, driving and outdoor clubs are popular activities for these travelers.
  6. Travelers want to shop. Of total spending in China in 2015, 63 percent was spent on luxury goods, with 50 percent spent in the U.S. When Chinese travelers visit, they want to shop. If a hotel is next to shopping outlets that might appeal, hoteliers should use that to their advantage in marketing strategies.

But the U.S. isn’t the only major suitor for the Chinese guest. Domestic travel is just as prevalent, and some areas offer lessons for U.S.-based hoteliers. For example, Vietnam continues to show growth, according to Jesper Palmqvist, who leads STR in the Asia/Pacific region. That growth isn’t just presenting across the major key performance indicators, he says, but also via international arrivals, infrastructure investment, airlift, brands and overseas investments. What’s more, the country has seen increased intra-Asia/Pacific travel and captured a large share of outbound mainland Chinese travelers. More than 30 percent of arrivals in Vietnam are now from this region.

As of July, Vietnam saw ADR increase 6.5 percent when measured in local currency. RevPAR remained mostly steady, falling only 0.4 percent.

“Earlier visa deregulation improvements have opened up new source markets, and…the timing was ripe for Vietnam to be more than just ‘a more rustic and underdeveloped Thailand,’” Palmqvist says. “It is so much more than that, and pent-up demand is huge.”

He says that major hotel groups saw the signs for the region two to three years ago and began putting flags in the ground. As a result, the country will increase existing room supply by over 50 percent. That is an eye-popping number, especially as U.S.-based hoteliers start to feel concern as supply growth at home starts reaching 2 percent.

Palmqvist says there are a few things U.S. hoteliers can learn from the region in terms of driving performance and maximizing return on investment. First, food in Asia is an important facet in travel, sometimes even in the select-service space.

But food service can be a tricky thing to handle at hotels that don’t offer extensive F&B options. One simple amenity can be offered right in guestrooms: access to hot water for a kettle to prepare tea or noodles, according to Attract China. Additionally, if a hotel does offer F&B options, providing Chinese food options can be another way to attract Chinese guests.

Technology is also key. About 75 percent of Chinese travelers look for free Wi-Fi at their accommodations, according to Attract China. While investing in bandwidth can be expensive, a solid free Wi-Fi experience is essential to the cohort, so ensuring the service is available in rooms and the lobby is essential.


Limited supply in some European hot spots is helping hotel performance, according to Thomas Emanuel, director of business development at STR. Additionally, the displacement of travelers from Turkey and Northern Africa has driven businesses, pushing growth in Portugal, Greece and Croatia.

As of July, based on local currency, Portugal has increased ADR by 11.2 percent and RevPAR by 7.6 percent, according to STR data. Greece has seen ADR grow 9.4 percent and RevPAR increase 6 percent. Croatia’s ADR is up 1.8 percent, while RevPAR is up 5.8 percent.

“One thing that we do need to watch is how these markets will be affected now that Turkey, and Egypt to a more limited extent, are recovering. We have also seen economic improvement in Spain and Portugal, in particular, which has driven solid increases in major cities,” Emanuel says.

Meanwhile, he says that Central and Eastern European cities have performed well in recent years, and the region has enjoyed double-digit RevPAR growth. The main reason is a perception of safety, which is important for Europe. But also, limited supply growth and political stability here have also been large drivers of business, as well as an increase in events and more airlift.

Central/South America

As the U.S. has faced some political unrest lately, the same is true globally. Latin America is one example to show how politics can affect the travel industry and the hotel business at large.

“In 2017, the major development in hotel performance was demand growth outpacing supply growth for the first time in years. It is also important to consider that 2018 is an election year for three main economies, Brazil, Mexico and Colombia,” says Patricia Boo, area director for Central/South America at STR. “This usually puts a hold on corporations and investment, particular this year, where the main candidates in each country are far right or far left.”

Last year, the region’s top performers were Argentina, with record occupancy levels and rate growth in line with inflation; and Costa Rica, where muted supply growth and steady demand growth have helped drive some of the highest occupancy levels in the region.

Year to date as of July, Argentina’s occupancy was 60.7 percent (+1.9 percent), according to STR. In local currency, its ADR is up a whopping 39.5 percent, while RevPAR has increased 42.1 percent. Supply growth is muted at 0.5 percent. Costa Rica’s occupancy stands at 73.9 percent over the same time period. ADR has increased 8.1 percent, and RevPAR is up 9.8 percent. Supply did not increase.

Boo says that although Central/South America is unstable, hoteliers there have learned to work past the uncertainty to maximize revenue when the cycle allows. That’s a good lesson for U.S.-based hoteliers.

“An increase in supply and costs is proving to be a challenge for many traditional hoteliers, and the arrival of main international brands is pushing the markets to look for new ways of doing business and professionalizing some practices,” she says.

U.S. hoteliers shouldn’t rest on their laurels when times are good. As the industry is a cyclical one, hoteliers need to prepare for the next downturn during the up cycle. That could mean renovating hotels now while demand is still on pace with supply, because renovating will be last on the list of priorities when the dollars slow. However, a newly renovated hotel could win business over its older counterparts.

Middle East/Africa

The tune is different for the Middle East/Africa region, as Philip Wooller, STR’s area director for the region, says not too many markets are booming in terms of performance.

“Looking at year-over-year data, one might deduce that Egypt is booming, but the absolute numbers suggest otherwise. The country’s performance is looking much better, but it still has a long way to go,” he says. Egypt has been in a period of recovery due to political unrest that began in 2011, which at the time caused occupancy to fall to levels below 20 percent. Since 2016, the market has started to experience double-digit increases in RevPAR as it continues to recover.

However, Wooller says Morocco is a country to keep eyes on. “Marrakech is having a very good year. Rates have declined in recent years making it a good value destination for Europeans and the Arab world overall,” he says.

As of July, Morocco’s occupancy has increased 0.8 percent to 61.4 percent, according to STR. In local currency, the country’s ADR is up 12.8 percent, and RevPAR is up 13.7 percent.

When it comes to takeaways for U.S. hoteliers, Wooller says the Middle East/Africa region perhaps teaches what not to do. That is, hotels in this region maximize for today and don’t focus on tomorrow.

“The U.S., on the other hand, has a fantastic balance of new supply and demand with marginal increases in performance – hence the current streak of RevPAR growth. Every market is different of course, but the U.S. generally gets it right,” he says.

But Wooller says it’s important to cater to a younger crowd.

“Keep the millennial happy – in the MEA, brands are introducing some really cool lifestyle brands, for instance,” he says. “Also, tech is important – working spaces – even if limited. Don’t neglect this area of your operation.”

Performance comparison among major regions, total U.S.

  U.S. Central/South America* Asia/Pacific* Europe** Middle East* Africa*
Occupancy 73.6%












ADR $133.44












RevPAR $98.17













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