Q3 2016 U.S. Hotel MarketView

December 16, 2016

  • The U.S. lodging industry achieved a modest year-over-year RevPAR gain of 3.3% in Q3 2016 as a result of no change in occupancy and a 3.4% year-over-year increase in ADR.
  • Five of the largest 15 markets recorded year-over-year RevPAR decreases in Q3. The largest drop was in Houston, where RevPAR fell by 15.6%.
  • Demand grew by 1.6% year-over-year in Q3, but was down from 2.1% in Q2. This marks the 27th consecutive quarter of positive demand gains, a streak that we expect will continue well into 2018.
  • The year-over-year increase in the number of available rooms held steady at 1.6% between Q2 and Q3. Rooms under construction expanded to more than 183,000 units, with another 192,000 expected within 12 months.
  • Hotel investment accelerated in Q3 from the prior two quarters to $7.6 billion, reflecting a year-over-year gain of 2.4%. Still, year-to-date investment is 41.2% below the same period in 2015. The cap rate for all hotel transactions averaged 8.52% in Q3, essentially unchanged from the prior quarter but up 30 bps from the prior year.
  • CBRE Hotels’ Americas Research projects that the U.S. lodging industry will achieve an annual occupancy rate of 65.0% in 2017, just shy of the 65.3% occupancy level expected for 2016.
  • ADR is forecast to grow by 3.3% in 2017, and annual supply by 1.8%—just shy of the long-run average. RevPAR is expected to grow by 2.9%.


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