Hotel Industry Occupancy Increased 2.1 Pecent this Year, Positive News for Vacation Rentals
July 25, 2006 Hotel industry occupancy reached 66.8 percent in the second quarter of 2006, up 1.2 percent compared with the same quarter last year, according to Smith Travel Research, who announced second quarter and first half 2006 results for the U.S. lodging industry today. Second quarter average room rate gained 7.0 percent to $97.02 and revenue per available room (REVPAR) --- the combination of occupancy and average room rate and a key industry productivity measure --- increased 8.3 percent to $64.79.
In the first half of 2006, industry occupancy improved 2.1 percent to 63.5 percent versus same period prior year. Average room rate was up 6.8 percent to $96.56 and REVPAR gained 9.0 percent to $61.30.
When we consider the increase in room rates and the concern about high gas prices, these are encouraging numbers for the travel industry in general, and for vacation rentals. The increase in room rates for hotels of 7 percent is a substantial one. However, this is an industry average which includes budget motels. It understates the increase in rates in major cities and destination resorts, especially the increase in luxury hotels.
Vacation rentals do not tend to raise rates as fast as hotels, and they should be in a good position to benefit with higher occupancy rates because of the higher rates charged by luxury hotels. However, this is true only if they are able to offer an acceptable level of amenities and luxuries.
