Meeting Mentor Magazine

December 2021

Steady Growth for Hotels

More Transient Business Competes with Meetings

Take away the Great Recession and rebound years, and today’s hotels are showing the steady growth typical over the past 25 years. That’s the message in the revised projections from STR and Tourism Economics. “The recovery is basically over,” said Jan Freitag, STR senior vice president.

The upward trajectory of revenue per available room will slow down a step in 2014, as will occupancy, STR and Tourism Economics forecast. They project that RevPAR growth will slow to 5.3% this year and 4.7% next year. The actual RevPAR growth of 5.5% in 2013 came in below the 5.8% forecast, a clear indication that the surge in demand from the recovery has peaked.

But the key number for meeting professionals remains average daily rate, which STR projects will steady at 4.2% growth in both 2014 and 2015. The upscale, upper upscale and luxury hotel segments will retain their rate strength, abetted by very strong transient business. “We’re suggesting that the room rate increases we have seen in the past will probably continue well above the rate of inflation, driven by the upper end of the market,” Freitag noted. “Lots of transient travelers are picking off room nights at these prime locations.”

This development will continue to place pressure on meeting groups contracting for later in 2014 and into 2015. “The absolute number of group rooms sold today is just below the numbers in 2007,” he explained. “But the transient numbers today are 25% above what they were in 2007.”

Meanwhile, the exhibition industry finished 2013 with overall growth of just over 1%, according to the Center for Exhibition Industry Research. The big metric in the CEIR Index was a 2% increase in number of attendees, which finally surpassed the previous peak in 2007. Because the exhibition industry follows GDP, current projections of improving GDP bodes well for the industry’s outlook, noted Brian Casey, CEIR president and CEO. Attendance is the leading driver in some sectors that CEIR follows, “a leading indicator that both net square footage and revenue associated with it should increase. Consumer confidence is improving, which means greater consumer spending — one of the biggest contributors to GDP.”

Indeed, the state of U.S. business travel is stronger than ever. The Global Business Travel Association’s outlook for 2014 is a 7.1% increase in business travel spending to $293.3 billion for 464.7 million trips. International outbound travel from the U.S. will take a big leap of 12.9% in 2014 to $37.2 billion, compared to minimal growth the past two years. Meetings business growth in 2014 nearly matches the business travel estimate. GBTA projects group travel spending will rise a healthy 7% to $126 billion, better than earlier predictions. — Maxine Golding

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About MeetingMentor
MeetingMentor, is a business journal for senior meeting planners that is distributed in print and digital editions to the clients, prospects, and associates of ConferenceDirect, which handles over 13,000 worldwide meetings, conventions, and incentives annually.

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