Late Cycle Supply Sources of the Occupancy Gap

Bram Gallagher | October 24, 2018

By Bram Gallagher The present hotel cycle is defying conventional expectations of late-cycle Revenue Per Available Room (RevPAR) behavior. Over the previous two cycles, recovery began primarily with occupancy. As the cycles continued, average daily rate (ADR) began to rise. Eventually, the increases to ADR were the dominant contributor to RevPAR growth, and occupancy leveled off or even slightly declined. These cycles, occurring from August 1992 to November 2002 and November 2002 to May 2010, lasted approximately ten and eight years, respectively. Well into the ninth year of its current cycle, we would expect that the hotel market would...