Second Quarter 2018
Economic Momentum Propels Occupancy to New Heights;
Private Investors Fuel Bidding in Secondary and Tertiary Markets
Hotel sector on track for exceptional room demand. Healthy
employment growth and increased consumer spending continue to drive
hotel performance nationwide. Occupancy rose to a 30-year high in March,
driving increases in ADR and RevPAR. The trend will continue as the
stimulative effects of the new tax laws drive economic growth and
unemployment remains low. Several markets with large development
pipelines, however, may face supply pressures, reducing occupancy and
slowing RevPAR growth.
- Record consumer and business confidence levels support
expectations of strong consumption and business spending this year.
These rising confidence levels will likely buoy room demand through the
remainder of the year, keeping occupancy at a historical high.
- A healthy pace of hiring, rising wages and a low unemployment
rate are underpinning strong summer travel expectations, with travel
associations expecting travel expenditures to increase by 5 percent this
year. Rising expenditures will bode well for hotel occupancy, ADR and
RevPAR.
- The accelerating economy and improving property performance
metrics have boosted supply additions in many markets, like Nashville,
which may begin to weigh on occupancy improvement. The metro has more
than 5,200 rooms underway, about 12 percent of its existing room
inventory. Increased supply has outpaced room nights, with occupancy
falling 60 basis points during the past 12 months.
Access Full Report ...more RSK: Quality labor and shortage is always a problem in hospitality and restaurant areas.
|