Record Revenue

2. Record Revenue • According to the US Travel Association, 2017 travel lodging revenues, including vacation homes and campgrounds, were $220.4 billion. Lodging was 21.3% of the total spent on travel, the second biggest expense after food. • During 2017, each of the industry’s key performance metrics were the highest ever: occupancy increased 0.9% to 65.9%; average daily rate (ADR) increased 2.1% to $126.72; and revenue per available room (RevPAR) increased 3.0% to $83.57. • Supply growth in the industry was the highest since 2009; nevertheless, demand (+2.7%) outpaced supply (+1.8%). New construction is decreasing for the first time since 2011. Of the top 25 markets, 18 experienced increases in YOY RevPAR during 2017.

3. 2018 Should Be Another Good Year • Spring 2018 will be a good season for group travel, according to TravelClick’s April North American Hospitality Review. Group bookings increased 2.7% YOY for Q2, ADR increased 2.5% and RevPAR increased 5.3%. • STR forecasts a strong demand for the rest of 2018, due to tax cuts, low unemployment and more international travel, which will reduce price pressure. During 2018, luxury and independent chain hotel occupancy is expected to increase the most, by 0.4%. • Independent hotels are expected to experience the greatest increase in ADR, at +2.5%, and RevPAR, at +2.9%, during 2018; and RevPAR for the upscale segment is projected to increase the least of any segment, at 1.8%.

4. Independents Remain Competitive • Since Q1 2014, independent hotels’ ADR has increased twice as fast as branded hotels’, due primarily to more online and mobile visibility and travelers’ search for authenticity and a unique experience. • Cookie-cutter hotels are boring and driving this trend. To compete, some established hotel chains are opening properties that try to capture the look and feel of an independent hotel to appeal to younger travelers. • Independents experience significant competition from home-sharing services, such as Airbnb. Independents are creating bars and restaurants where locals and travelers can mix, for a local immersive experience home-sharing services are unable to offer.

5. Competing with Airbnb • A study of the Airbnb effect on hotels found that although its rooms only accounted for 4% of guests and fewer than 1% of total lodging rooms, in large markets during peak times, Airbnb resulted in 1.3% fewer hotel nights booked and a 1.5% revenue loss. • Consumers using Airbnb during busy travel times received, on average, a $57 surplus, which did not always manifest itself in lower prices, but in a nicer accommodation than they otherwise would have obtained at the same price. • Airbnb had the most impact in cities with constrained room supply, such as New York and San Francisco. The flexible nature of Airbnb allows homeowners to make their properties available only at peak times, responding rapidly to market conditions.

6. Guest Insights • The age groups spending more on lodging are ages 25–34, +20%; 65–74, +23%; and 75+, +24%. All seniors were a greater share of households (45%) and spending on lodging (45%). • The amount of money spent on lodging, as a share of total consumer expenses, increased 41.8% from 2011 to 2017, and food and beverage spending increased 31.2%. • During 2017, families took 8% of all US trips. Airbnb was a popular lodging choice for families, who accounted for 14% of all Airbnb guests. The most popular family destinations were Kissimmee, FL; Los Angeles, CA; and San Diego, CA.

7. Responding to a Changing Market • The extended-stay segment is expanding. As of February 2018, there were 424 extended-stay hotels being built with 46,551 rooms, accounting for 27% of all new hotel construction. An additional 605 projects were scheduled to begin within the next year. • Apps, such as HotelTonight, are making it easier for spontaneous travelers to find good hotel rates at the last minute. This is also driving shorter vacations, such as long weekends. • Adventure traveling is a trend, with hotels near national parks and other sites that offer outdoor adventures benefiting. Hotels are shifting from formal room service to casual food takeout in the lobby.

8. Advertising Strategies • Suggest local hotels, especially independents, promote a “Learn More About Your City” weekend, with special room rates and a series of local tours for guests, such as unusual restaurants, pub hopping, music venues, gardens and parks, specialty museums, etc. • Highlight hotel architecture, history, amenities and/or services that are quirky, interesting or unique. • Hotels near a national park or other outdoor adventure area should emphasize that proximity, your staff’s familiarity with the area and detailed information, such as trail maps, transportation to whitewater rafting/canoeing destinations, guides, etc.

9. New Media Strategies • Post pictures of your hotel’s most unique features and amenities on Instagram and Facebook to spark potential guests’ imagination. • To emphasize your hotel’s involvement in the local community, promote on your Website and social media local weekend activities/events in which guests can participate and/or volunteer. Offer a discount for their participation and/or donation. • An app has become an essential marketing tool for hotels of every size. Promote the use of your app by offering a free item or service in their room when guests show they have downloaded the app when checking in.