PROVIDENCE – Evidence for steady, moderate growth and predictions for the changing shape of the hospitality industry were presented at the 14th annual Rhode Island Hospitality Association Economic Outlook Breakfast hosted Thursday at the Providence Biltmore Hotel.
Rachel Roginsky, principal of Boston-based Pinnacle Advisory Group, reported the nation experienced a 65.5 percent occupancy rate in 2016 – the highest ever recorded and the seventh year of occupancy growth. Additionally, the 2016 average daily rate was bumped up by 3.2 percent to $124 from 2015 and RevPAR increased by 3.2 percent to $81.
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In 2016 Rhode Island’s occupancy rate was 67.4 percent with a $142.43 ADR and $96.04 RevPAR.
Regionally, Rhode Island ranked second-highest among New England states for occupancy with Massachusetts coming in first place (68.9 percent) followed by Connecticut and New Hampshire tied at 60.7, Vermont (60.3) and Maine (59.2).
Locally, from July 2016 to July 2017 Providence experienced an occupancy rate increase to 70 percent in 2016, a bump in ADR to $165.67 as well as a jump to $115.91 in RevPAR.
July 2016 to July 2017 in Warwick saw a decrease in occupancy to 69.8 percent, RevPAR fell to $70.44 and ADR grew to $100.92.
In the City by the Sea occupancy fell between July 2016 and July 2017 to 58.5 percent, RevPAR fell to $121.51 and ADR grew to $207.80.
Roginsky credited the decrease in Newport’s year-to-date, occupancy rate to cooler, less beach-like weather during the months of May and June.
Thursday’s event was the first time Roginsky singled out Middletown data from that of Newport. From July 2016 to July 2017 she found occupancy rates fell to 55.9 percent, ADR grew to $136.82 and RevPAR jumped to $76.47.
The industry continues to be impacted by its sister sector, Airbnb, said Roginsky, as well as the more recent impact of President Donald Trump’s election.
“Trump’s policies and travel bans are a turn off to many global travelers,” she said, adding international visitation to the U.S. has declined by 16 percent since January, when the president took office.
Also speaking at the Thursday event was Hudson Riehle, senior vice president of the National Restaurant Association’s research and knowledge group. Within the 47-year timeframe the NRA has tracked the restaurant industry there has been a 6.4 percent annual growth rate, what Riehle called “solid” movement. However, since 2007 that upward mobility declined to 3.7 percent, which hecategorized as “positive, but more modest” and predicted the trend would follow this slower path in years to come.
Summarizing the impact of the industry nationwide, Riehle reported a “record high” $799 billion in annual sales in 2017 – “despite a host of challenges.”
Riehle emphasized multiple changes in the industry sectors, especially the growth in popularity of snack and nonalcoholic beverage bars, boom in restaurant-related technology and a move away from brick and mortar stores as the quintessential model for the industry.
Between 2015 and 2016 sales at snack and nonalcoholic beverage bars – such as Starbucks or Baskin-Robbins, said Riehle – grew by 6 percent to $40.8 billion, making it the fastest growing sector in the restaurant industry according to NRA data.
Analyzing consumer spending, Riehle said there has been a “pent up demand since the recession” for eating at restaurants, however, it is “important for the restaurant operator to nudge the consumer to patronize.”
Some encouragement tactics, Riehle believes, will come though technology. Working from the monthly fixed-rate business model perfected by companies such as Netflix which are targeted at millenials, Riehle noted:
- 45 percent of adults would pick a specific table when making an online reservation and 10 percent would pay a $10 fee to get a better table
- Three quarters of diners would eat at a restaurant during off-peak hours if they were offered a discount to do so
- 52 percent of millenials would enroll in a pre-paid monthly program including restaurant-cooked meals, discounts and benefits
“From the consumers standpoint there is nothing more convenient than having the restaurant come to them,” he said.
More and more business transactions are occurring online as technology allows consumers to order, pay and request delivery online. This, said Riehle, means brick and mortar stores are no longer the model for the restaurant business. However, the restaurant industry remains a “very competitive environment,” said Riehle whose data shows 190 restaurants per 100,000 people across the country.
Emily Gowdey-Backus is a staff writer for PBN. You can follow her on Twitter @FlashGowdey or contact her via email, gowdey-backus@pbn.com.
