STR and Tourism Economics project revenue-per-available-room (RevPAR) growth will continue to slow during the next two years, according to a new analysis of long-run lodging trends in relationship to the state of the economic cycle.
The STR/Tourism Economics forecast model predicts that RevPAR growth will slow to 5.3 percent in 2014 and 4.7 percent in 2015. This is an extension of the projections made by the companies last year.
"Our forecasts for 2013 were more conservative than many analysts expected," said Jan Freitag, senior VP of strategic development at STR. "But we remained convinced that a shift to more moderate, post-recovery performance was under way."
STR and Tourism Economics forecasted RevPAR growth of 5.8 percent for 2013, compared to actual growth of 5.5 percent-based on updated year-end figures released by STR this month.
Demand expectations of 2.1 percent growth for the year compared favorably with an actual gain of 2.3 percent.
Both indicators reflect a decline in the pace of increases from each of the previous two years.
Looking ahead, the forecasting partnership expects further slowing as demand and average daily rate (ASR) converge with non-recessionary period growth averages.
"While the U.S. economy is gathering force, the lodging sector is on the back end of its recovery cycle," said Adam Sacks, president of Tourism Economics. "We expect RevPAR to continue to grow, but not at the rates seen over the past four years."
Oxford Economics, the parent company of Tourism Economics, expects U.S. gross domestic product (GDP) to increase to 3 percent this year, but the demand for lodging is predicted to grow 2.2 percent.
According to STR and Tourism Economics, this dynamic is to be expected, given historical trends.
"Over the long term, lodging demand tends to expand more slowly than GDP," said Aran Ryan, director of lodging analytics at Tourism Economics. "Since 1987, U.S. GDP growth has averaged 2.6 percent a year compared with lodging demand growth of 1.9 percent."
The companies also reported that room nights per capita (based on working age population) and room nights per employee reached historic highs in 2013, indicating that the surge in demand associated with the recovery has peaked and a more tempered expansion lies ahead.
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