STR has undertaken its first ever global year-end review of the hotel industry. The report delves into trends impacting the industry both at the regional and market level, with deep-dive analyses on our top three markets to keep an eye on in each region. With insights from our latest forecasts as well as analysis on factors including compression, currency exchange rates, pipeline development, event impacts, performance by hotel class and many more, the study is a valuable tool for anyone with a vested interest in the industry. 

Here, we highlight a few of our regional insights. To get the full study, visit our website.

North America
In 2016, the U.S., Mexico, and Canada all saw supply and demand growth between 1-2%, resulting in relatively flat occupancy growth. For all three countries, rate growth was the main driver of RevPAR performance. In terms of actuals, the U.S. posted record levels in 2016. Occupancy was fairly consistent across the region, with strong demand growth. We are, however, seeing that demand is starting to slow down, while supply is increasing.

The U.S. experienced strong demand growth in the transient segment in 2016, both on the corporate and leisure sides. This benefitted several urban markets like Nashville, Portland, Los Angeles and San Francisco. Leisure destinations like Hawaii and Charleston also posted strong growth. Low oil prices impacted several markets, particularly in Texas, Oklahoma, North Dakota, Wyoming, New Mexico, West Virginia, Pennsylvania and Ohio. Fears over the Zika virus also impacted parts of Florida.

Central & South America
Overall, supply outpaced demand for the region, resulting in occupancy declines. RevPAR was up when reported in local currencies, driven by ADR growth, but looking at these figures in USD shows the role currency devaluations have played. Oil prices, political and economic instabilities, and supply growth have all impacted the region’s hotel industry. Central/ South America currently has over 60,000 rooms in the pipeline, and over half of them are in Brazil.

Of course, the biggest story for South America in 2016 was the Rio Summer Olympics. While there were controversies about ‘over-supply’ in the market leading up to the event, as we reported back in October, Rio’s hotel market received a significantly larger RevPAR boost than London did in 2012 and Beijing did in 2008.

Not unlike several other parts of the world, Europe had its ups and downs in 2016. Overall, results were positive when reported in euro constant currency. RevPAR increased 2.1% compared with 2015, but the impacts of terror attacks still weigh on performance in certain parts of the region. Paris and Brussels both struggled through most of the year, and December 2016 was the first month of RevPAR growth for both of these cities.

While we saw struggles in some markets, other markets surged with substantial performance growth. In Southern Europe, cities like Madrid, Barcelona and Lisbon have recently been considered relatively safe destinations and posted significant growth throughout the year. In Eastern Europe, Warsaw, which has also been regarded a relatively secure location recently, posted double-digit growth in RevPAR for the year.

Middle East & Africa

In 2016, hotels in the Middle East and Africa region struggled to adjust from macroeconomic pressures stemming from low oil and commodity prices. In the GCC, as STR reported last August, RevPAR and gross operating profit per available room (GOPPAR), the key hotel profitability indicator, have trended similarly to the price of crude oil during the past decade. With many of the Middle East’s key cities heavily reliant on corporate travel, this is to be expected.

Supply growth is also weighing heavily on performance, which has been the case in Dubai for quite some time, especially as the market looks ahead to hosting the 2020 Expo. Judging by pipeline development, Jeddah, Riyadh and Muscat will also start to undergo significant expansion in the near future, so it is an encouraging sign to see that these markets are beginning to generate further interest and investment.

Asia Pacific

Overall, hotel demand growth outpaced supply growth for the Asia Pacific region in 2016. Australia was the standout market, in terms of both performance and its strong economic and investment outlook. Meanwhile, China’s slowdown in economic growth fused with a slowdown in hotel performance, resulting in flat RevPAR growth as occupancy rose and ADR declined.

In terms of inbound arrivals, Japan had a standout year, welcoming over 24 million international visitors in 2016. In March 2016, the Japanese government announced that it was doubling its original goal of attracting 20 million inbound tourists each year by 2020 to 40 million visitors, as the country gears up for hosting the 2020 Summer Olympics in Tokyo. Japan closed 2016 with the highest actual occupancy level in the region.

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