WASHINGTON DC – Expect hotel rates to keep rising this year in many top markets especially San Francisco, hotel experts have been saying over the past two days during the BisNow annual hotel industry conference.

The conference is attended by developers, lenders, architects, brand executives and operators; speakers included Jim Petrus, who runs Trump Hotels, and Jim Abrahamson, the CEO of Interstate, the world’s largest hotel management company.

Growing demand from travelers as well as groups combined with minimal new hotel construction is leaving the traveling public with fewer rooms to rent. That means hotel operators maintain the upper hand in setting rates. The result could give newfangled, short-term lodging providers such as Airbnb new opportunities to attract new customers who refuse to pay higher rates – especially entrepreneurs and convention goers. But that’s another story….!

The increase in revenue per available room in the January-March period was driven by increases in room rate, industry analyst Jan Freitag of STR told conference attendees. The gathering was held at the $520 million Marriott Marquis hotel, which opened last week.

Don’t expect the supply side of the equation to change anytime soon.

“Only 11 of the top 25 hospitality markets have supply increases of 2% or greater,” said Richard Rudd of Allied Advisors, noting New York as the exception with 12.8% increase. “There’s an imbalance between supply and demand. With (revenue per available room) increases over the next years, revpar will be back to where it was at the end of 2007.”

About 100,000 rooms are under construction in the U.S. compared to 211,000 rooms in 2007 – the prior peak level, Freitag said.

Which markets are boasting the highest revpar gains, which typically suggests rate increases?

  1. San Francisco, as well as Oakland located just across the Bay Bridge
  2. Nashville
  3. Denver
  4. Houston

At the other end of the spectrum, financial results fell off during the first quarter in markets such as New York and Washington D.C., which one year ago hosted the presidential inauguration.

Readers: Have you noticed hotel rates soaring in some markets?

Photo taken by Barb DeLollis at Hotel BPM in Brooklyn, N.Y.