Hotel room occupancy rates slipped 2.6 percent to 61.4 percent in the first half of the year compared to the same time period last year. But, despite the softening in demand, average daily room rate and revenue per available room continued to climb, according to Smith Travel Research.

Occupancy rates took a sizable dip in the month of June, dropping 4.5 percent compared to last June. The downward trend is caused by a combination of factors, including a sputtering economy and a 2.3 percent increase in room supply, according to STR officials. “A slowing economy and significant food and fuel-price increases are squeezing consumers and dampening lodging demand,” said Mark Lomanno, president, Smith Travel Research, in a press release. “The combination of growing supply and slowing demand has resulted in declining occupancies and slower, though steady, average rate increases,” he added.

Average daily rates jumped 4.2 percent to $107 in the first half and 3.8 percent in the second quarter. RevPAR gained 1.5 percent to $66 in the first half compared to the previous year, but increased just 1.2 percent in the second quarter. Overall, total revenues grew 3.9 percent in the first half of the year to $54 billion.

With the prospects for the economy not looking to improve, the U.S. lodging industry is facing strong headwinds, Lomanno said. “We expect a challenging operation environment in the second half of the year.”