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Hotel Market Still On A Tear

The U.S. lodging market posted strong growth in the first half of 2006, and a leading market research firm expects that trend to continue through the latter half of the year.

According to Hendersonville, Tenn.-based Smith Travel Research, industry occupancy hit 66.8% during the three months ending June 30. That represented a 1.2% increase over the second quarter 2005 occupancy rate. Average room rates increased by 7% during the quarter to hit $97.02. First half industry room supply grew by a meager 0.4% while demand (the number of room nights sold) increased by 2.4%.

“First half industry performance was strong, particularly considering prior year comps were tough,” says Mark Lommano, president of Smith Travel Research. “Year-over-year comparisons will be even more difficult in the second half. Additionally, many forecasts call for slower economic growth for the balance of 2006.”

To that end, Lommano expects revenue per available room growth to continue through the end of the year. He does, however, expect that growth to register “somewhat slower” than the 9% increase we experienced in the first half of 2006.

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