Last month we reported that the average daily rate (ADR) shortfall was narrowing—it was down 3.3 percent versus the same time last year. This month that shortfall has narrowed even further—now down just 2.2 percent versus the same time last year. From our top 25 North American markets, New York City and Washington, D.C., were up 3.1 percent and 2.6 percent, respectively, while Detroit was down 10.4 percent followed by Seattle (down 8.6 percent) and Phoenix (down 8.1 percent). These mixed results are certainly due to local conditions in each market. However, this general improvement in ADR is what we would expect, given an occupancy outlook that continues to strengthen.
Committed occupancy for the current plus three future quarters is up 4.7 percent. This is an improvement from last month, when committed occupancy was down 1.7 percent. New business added in the last month was strong, up 20.8 percent over the comparable period last year.
Charlotte boasts the largest increase in committed occupancy, with a 19.1 percent increase over last year. Honolulu is next at 11.1 percent and Denver is up 10.3 percent over the same period last year. Of our top 25 markets, only Indianapolis showed a decrease in committed occupancy over last year, down 2.2 percent.
So, the overall occupancy improvement is broad-based across markets, but the news is also positive across market segments. Group-committed room nights are up 3.2 percent. Last month, group bookings were tracking 3 percent behind last year. New group sales last month were very strong, up 55.2 percent over the comparable period last year, while transient room nights are up 7.4 percent. Last month, transient demand was up 2 percent. Room nights booked in the last month were ahead of the comparable period last year by 8.2 percent.
Based on the strength of advance demand and improving pricing conditions, it appears that the industry will return to RevPAR growth earlier than expected. As with the general economic conditions, risks persist. However, each month continues to bring good news
Steve Swope is the CEO of Rubicon. More information on the firm is available at www.therubicongroup.com.