Positive room-rate dynamics emerge at local market levels

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Source: Hotel Management
By Robert Mandelbaum
January 7, 2019

Based on data presented in the December 2018 edition of “Hotel Horizons,” we find a correlation between the occupancy level, changes in occupancy and changes in ADR in the 60 markets within the Horizons universe. In summary, markets with the greatest increases in ADR are those with the highest occupancy levels and strongest changes in occupancy. It is apparent that property-level operators in high-performing markets are taking advantage of the basics of supply and demand when setting their room rates.

Strong growth in lodging demand is enabling major-market operators to achieve this pricing power. While lodging demand for the entire U.S. market is forecast to increase 2.1 percent in 2019, the demand for accommodations in the 60 major markets covered by CBRE is projected to grow a stronger 3.3 percent.

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