by Calculated Risk on 11/29/2019 11:21:00 AM

From Jan Freitag at HotelNewsNow: Consecutive RevPAR dips make it official: Upcycle over

Let’s look at what we know: RevPAR has now declined two months in a row—three months in the last year, and four months in the prior 13 months. Because everyone likes a record, we keep counting RevPAR growth months and are now at 112 out of the last 116 months.

That 112 months count is the record we had wanted and deserved, right? But of course it is fuzzy math since it was already back in the golden days of September 2018 that RevPAR declined for the first time—102 months since the RevPAR rocket took off in March 2010. Then RevPAR declined again in June (positive months counter: 110), September (112) and now October (112, still).

Is the upcycle over? Yes, it is. Two consecutive months of RevPAR decline are proof. But the other reality is this: annualized RevPAR will likely not decline at all in this cycle. So maybe, if you judge by year-end results, this cycle is not over at all. Our friends from Tourism Economics are clear about their conviction that GDP growth will continue to be positive, with no recession in sight, and this then fuels positive RevPAR growth. Our new 2020 RevPAR growth forecast isn’t pretty, but it’s realistic and realistically positive at +0.5%.

To get to that number, though, I would expect gyrations around the 0% point, meaning we will see plenty more months of mild RevPAR declines balanced by months with tepid RevPAR gains. That is the future we face, and the reality we already live in.

I guess the takeaway from this latest RevPAR decline is simply to heed Douglas Adams’ warning in The Hitchhiker’s Guide to the Galaxy: “Don’t Panic,” inscribed in large friendly letters on its cover.
emphasis added