U.S. Hotel Revenue Pegged to Rise for the Summer Based on Rate Increases
Smith Travel Research (STR), which tracks supply and demand data for the hotel industry and provides valuable market share analysis for all major international hotel chains and brands, has forecast that revenue per available room (RevPAR) will rise 5.7% this summer in the United States. According to STR, RevPAR for June, July, and August will rise to $73.59, a record figure for the summer months, surpassing $73.26 in the summer of 2007. The RevPAR growth is good news because most of the increase is from room rates, not occupancy.
We at IPOAUSA will also be looking closely to see how the increase in room rates and resulting revenue will affect General Liability rates. The Insurance Services Office (ISO) compiles ratemaking data and files rates for the majority of insurers providing General Liability coverage. GL premiums are based on the rate of receipts for hotels. As revenue increases because of higher room rates this summer, we may very well see hotels facing higher premiums, including for those whose exposures have remained unchanged since the past year.
IPOAUSA’s Synergy of 3 Divisions provides agents with access to admitted, surplus and program markets for the hospitality industry, including hotels and motels. This is especially important as we may be experiencing a confluence of events occurring in this space: Between the general firming of rates (according to MarketScout, general liability was up 3% in April) and tougher underwriting in our industry, along with the rise in room rates and resulting receipts, hospitality clients could be seeing noticeable increases in premiums. With a suite of options and alternative markets, IPOAUSA can help you determine the best solution for your client.
For more information about the our hotel insurance solutions, please, contact Stefan Burkey at 877.653.IPOA (4762).