Minnesota’s Lodging Performance through the 1st Quarter of 2012
Release Date: May 04, 2012
This article and graphs are provided under permission granted by STR (Smith Travel Research, Inc.), the source of the data.
Minnesota’s lodging industry started 2012 with moderate 1st quarter year-over-year growth in five of six reported metrics, and a small decline in the sixth metric – room supply. The year-over-year 1st quarter change for all six metrics was lower than the year-over-year change a year earlier (i.e., 1st quarter of 2011 compared with 1st quarter of 2010). This slowing down of growth in lodging performance metrics follows a national trend that reflects a common progression coming out a recession, with lower growth building on initial strong growth from recession-era lows. While the drop-off in the 1st quarter was more pronounced for Minnesota than for the U.S.. it remains to be seen whether or not this softening of lodging growth in Minnesota is part of a longer term trend.
Even as Minnesota and U.S. growth slowed, the seven-state West North Central U.S. region that includes Minnesota bucked the slower growth trend and experienced stronger year-over-year 1st quarter 2012 growth when compared with 1st quarter 2011 growth. Unlike Minnesota’s experience, lodging in the rest of the region was slower to recover from the recession initially, and is now sustaining a higher level of growth as the recovery progresses. Two sets of graphs, with links below, show changes in Minnesota’s lodging metrics during the 1st quarter of 2012.
First Quarter 2012 Lodging Performance Changes for Minnesota, the U.S., the Region and Minnesota Areas - The 1st quarter of 2012 was the first quarter in quite a while that saw U.S. and regional growth rates exceed Minnesota’s growth for all six metrics. Within Minnesota, all of Minnesota’s 10 distinct market areas (i.e., five in the Minneapolis-St Paul metro and five in Greater Minnesota) experienced 1st quarter year-over-year annual growth in both revenue and revenue per available room (i.e., RevPAR). However, each of the other four metrics saw declines for one or more Minnesota areas. Similarities between Minnesota and Minneapolis-St Paul metro 1st quarter changes point toward a possible end to a period of markedly stronger growth in metro lodging metrics compared with greater Minnesota’s growth.
First quarter 2012 changes in Minnesota lodging metrics (i.e., compared with 2011) and 2011 compared with 2010 were:
- Occupancy 0.6% for 2012 (5.7% for 2011)
- Supply -0.4% (0.8%)
- Demand 0.2% (6.5%)
- Revenue 3.0% (9.8%)
- Room rate 2.9% (3.1%)
- RevPar 3.5% (9.0%)
Month-by-Month Minnesota Lodging Performance Changes through March 2012 - Minnesota’s growth in year-over-year monthly lodging metrics was fairly strong and consistent for most metrics through the 3rd quarter of 2011. (July was the exception, presumably attributable to the 20-day state government shutdown.) Then, starting in October and continuing through the 1st quarter of 2012, growth slipped in all six metrics. During the 1st quarter of 2012, continued (if weak) growth in room rates contributed to modest growth in revenue and RevPAR each month. January declines in demand and occupancy gave way to modest growth in February and March.
Much of Minnesota’s welcomed, strong growth in lodging metrics over the last couple of years can be attributed to the low recession-era lodging metrics against which growth was measured. While it is not realistic to expect the strong growth coming out of the recession to be sustained indefinitely, Minnesota’s recent level of decline in growth is somewhat unexpected. As we proceed into the important summer season, it will be of great interest to see what trends emerge for Minnesota’s lodging performance.
Click below for accompanying graphs of Minnesota lodging performance (repeats of links from above):