PKF report predicts high industry optimism

PKF report predicts high industry optimism
In Q3 2014, InterContinental Hotels Group reported its strongest quarterly RevPAR growth in eight years.

In Q3 2014, InterContinental Hotels Group reported its strongest quarterly RevPAR growth in eight years. 

National Report – A recent report from PKF Hospitality Research shows that all segments of the U.S. lodging industry are on track to enjoy strong performance for the foreseeable future. PKF’s Hotel Horizon’s report cites rising employment levels, combined with overall worldwide economic recovery, as a gateway to RevPAR growth in a majority of markets and across chain scales and location categories through 2017.

“No matter what hotel performance indicator you look at for any type of hotel, we foresee extremely favorable movements the next few years,” Mark Woodworth, president of PKF-HR, said in a statement. “Our firm is projecting demand growth to outpace changes in supply in the U.S. through 2016. That will result in industry wide occupancy levels at, or above, all-time record levels through 2017.”

Evidence of these improvements in RevPAR can be found in hotel brand quarterly reports, which were released October end. One such report, by InterContinental Hotels Group, shows that in Q3 2014 the company reported its strongest quarterly U.S. RevPAR growth in eight years.

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The Hotel Horizons report forecasts average daily rate to increase by an annual average of 5.4 percent from 2014 through 2017, and unit-level net operating income growth at an average annual rate of 11.8 percent.

John B. Corgel, the Robert C. Baker professor of real estate at the Cornell University School of Hotel Administration and senior advisor to PKF-HR, stated as part of the report that forecasting agent Moody’s Analytics produced that the U.S. is on track to reach full employment by 2016. Additionally, Moody’s forecasts show that by the end of 2014 the national unemployment rate will drop to 5.9 percent.

PKF’s previous research concluded that changes in employment have the greatest impact on the performance of hotels in the lower-priced chain-scales, while changes in income influence the demand for upper-priced lodging facilities. Corgel said that Half of the 20 Hotel Horizons markets forecast to receive the largest increases in employment are also expected to benefit the most from increases in lodging demand.

“According to Moody’s, close to 90 percent of the local economies in the U.S. currently are classified as being in either a recovery or expansion phase,” Corgel said in the report. “Accordingly, we will see 15 of our 55 Horizons markets achieve all-time record high occupancy levels in 2015.”

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