San Diego County’s lodging industry should see continued growth in 2016, with a “soft landing” expected for the local and U.S. markets in 2017 as hotel room demand slows, according to a newly issued forecast by San Diego-based consulting firm RAR Hospitality.
At a March 25 forum in Carmel Valley, company President Robert Rauch said the San Diego market this year should achieve its highest hotel occupancy levels and average daily room rates of the last 30 years. Regionwide occupancy is expected to remain at 76 percent, with rate growth of 5 percent, to $158. Revenue per available room (RevPar) is expected to reach $120, topping 2015’s $115.04.
Local hotel room supply is expected to increase by approximately 1,200 new rooms, for a 2 percent rise, after the room count rose 1 percent in 2015. New supply this year is expected to be absorbed by demand increases at the same level.
In downtown San Diego, 1,081 total hotel rooms are expected to be added to the market by the end of 2016, though just 621 of those will come online in time to impact business during the year. A 6.5 percent supply increase is expected to be offset by a nearly 6 percent rise in demand.
Downtown hotels are forecast to see continued strong convention center demand in 2016 due to cyclical bookings by the San Diego Tourism Authority, Rauch said. Downtown hotel occupancy this year will continue to hold at around 80 percent, with average rates growing 5 percent and RevPar rising 4.5 percent.