It seems that, according to at least one expert, hotels in the US may be on the upswing when it comes to occupancy rates. In an article for USA Today, Jan D. Freitag of the industry analysis firm STR, stated that in the first five months of this year, hotels in the United States sold about 430 million rooms. Wrap your head around that for a second. And yes, it's a record for any five-month period.
With only a modest addition of properties to the pool of hotels in the country, this means that hotels were filling their rooms at a greater rate than before. Students of supply and demand that you all are, I'm sure you can see where this is going. That's right, higher rates. Compared to the first five months of 2011, says Freitag, the average nightly rate for a hotel room increased by around four percent, with luxury hotels increasing their prices nearly five percent. Freitag indicates that most industry analysts predict 2012 to end with an overall four percent increase in rates.
Back in May, industry analyst Alan Benjamin predicted a banner year for hotel renovations in the US on HotelNewsNow.com, partly due to an increase in hotel transactions, that is, hotels bought and sold. A statement earlier this month by Jones Lang LaSalle Hotels supports Benjamin's claim, reporting transaction volume for hotels in the US at 5.1 billion dollars between January and May of this year (excluding the Motel 6 deal which hadn't been finalized at the time), the second highest volume for the same period in the last four years. Most of the deals were single asset and the average selling price was $40 million. And as brands turn over, says Benjamin, hotels will introduce improvement plans for their properties.
Freitag, too, points out that hotels around the country are renovating and upgrading or augmenting their amenities and says that he does not anticipate a drop in prices anytime soon.
What do you think? Do added amenities make the rate increase easier to swallow?
Photo credit: Hotel room interior via Shutterstock