- The US lodging industry was considered robust in 2014 and 2015 is expected to be as strong.
- The US lodging industry is anticipated to finish 2014 at approximately 64.5%.
- Significant recovery in demand has been experienced in 90% of the major markets
- The average room rate was expected to increase in 2014 by approximately 4.5% and is expected to increase by approximately 5.5% in 2015.
- 2014 RevPAR increases are anticipated to approach 9%.
- The 2014 increase in rooms supply should be less than 1%.
- 2015 anticipated increases are 1 to 2% in occupancy, 5 to 6% in average room rate and approximately 6 to 7% in RevPAR.
- The growth in demand(in all sectors) is fueling the increase in annual occupancies.
- The growth in rooms supply continues to be less than 1.5%
- Rooms supply growth is evident in all parts of the United States (both urban and suburban areas).
BUSINESS SCENARIOS FOR 2015 AND BEYOND - Chicago
The Chicago market is in the midst of a hotel building boom with over a 20% increase in room supply coming on line in the next three years based on the lodging properties in the pipeline. We are forecasting a decline in occupancy of about one% for each of the next two years, dropping from the current 75% to 73% by 2016. While about 20% of the proposed rooms may be dropped as the market becomes more competitive, most of the proposals are put forth by qualified and experienced developers. The neighborhood areas outside of the traditional loop, River North and North Michigan Avenue are also seeing development activity, with five projects in the west Loop area, one in Wicker Park, and a couple in Wrigleyville (the neighborhood surrounding the home of the Chicago Cubs). Additional focus on McCormick Place (Chicago’s Convention Center) to provide a second headquarters hotel to support convention sales is underway, supplemented by plans to add a sports arena and a third, but smaller hotel to an expanding south side market.
The suburban development picture has picked up, with projects underway in several markets, Schaumburg, Mokena, Lake Forest, Arlington Heights and Naperville. Suburban markets are expected to pick up a few (5 to 7) occupancy points this year with some strong rate growth (4-5%).
A series of alternative products are also entering the market with two hostel operations and a couple of economy-priced smaller hotel projects (in terms of the number of rooms). Much of the downtown activity is in repurposed structures, taking such space as the Chicago Automobile Club building, the Chicago Athletic Club and four office/bank structures from class C to upscale hotel offerings. The Virgin is probably the most prominent of those in the works.
MPEA (Metropolitan Pier and Exposition Authority) continues its redevelopment of Navy Pier, the busiest tourist attraction in the market area, with a proposal for a hotel development on the east end of the mile-long tier. The intense competition for conventions has slowed the growth in that market sector but it is replaced with a new emphasis on tourism that is paying off in strong growth in both domestic and international tourism activity. However, conventions remain the number one source of business in the central business district, accounting for 50% of the room nights annually.
Horwath HTL has created a new brand identity – CHAT, tailored for China’s hotel and tourism industry! CHAT, the abbreviation for China Hotels And Tourism, encourages industry people to gather, create dialogue and network through the platform, as well as exchange and share experience and knowledge. CHAT Beijing is an enhancement of the “China Hotel Development and Financing Conference”, which has been held for ten years in Beijing. We further focus the conference specifically on hotel and tourism development and investment issues. There are 650 delegates attended 2014 CHAT Beijing with the largest segment being domestic hotel and tourism developers and owners. CHAT Shanghai is an upgrade of our annual “China Hotel Market Review and Outlook Seminar”, which has been held over the past six years. CHAT Shanghai focus on hotel asset management and operations. 460 delegates attended CHAT Shanghai in September 2013. CHAT Beijing and CHAT Shanghai held in Spring and Autumn respectively cover the full hotel and tourism business cycle from development and investment to asset management and operations. CHAT will enable you to achieve successful business development through its various powerful platforms!
About Horwath HTL
Horwath HTL is the management consulting of Crowe Horwath International that specializes in hotel, leisure and tourism industries. Established in Asia in 1987, Horwath HTL has consulted about 4,000 hotel and tourism related projects throughout the region (including over 1,200 projects in China) for clients ranging from individually held businesses to the world’s most prominent operators, developers, lenders, investors and industrial corporations. Horwath HTL now operates offices in several key cities throughout the Asia Pacific region, including Auckland, Beijing, Hong Kong, Jakarta, Kuala Lumpur, Mumbai, Shanghai, Singapore, Sydney and Tokyo. Our offices work closely together to ensure that our clients receive a multi-skilled international perspective for their projects. Horwath HTL is also supported by the Horwath database, the largest and most complete hotel and tourism related database in the world. No other firm is better positioned to meet today’s and tomorrow’s industry challenges than Horwath HTL – Experts in the hotel, tourism and leisure industries.