Last year hoteliers enjoyed continued growth in key performance metrics. This year, research firms expect that party to continue. However, in some areas, the party won’t be as loud.
Here’s a roundup of some of the recent forecasts released by data crunchers:
STR, Tourism Economics Say More Growth
STR and Tourism Economics released their latest forecast in conjunction with the recent Americas Lodging Investment Summit. The companies project that the U.S. hotel industry will post some record-breaking performance levels this year.
Occupancy is expected to increase 0.3 percent to 66.1 percent in 2018, according to the forecast. Average daily rate is forecast to rise 2.4 percent to $129.77, while revenue per available room should see a 2.7-percent gain to $85.82. The researchers do note that RevPAR grew at least 3 percent each year from 2010 to 2017, however.
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When breaking down segments, the researchers project that the luxury and independent chain-scale segments are likely to report the largest increases in occupancy at 0.4 percent. Independent hotels are forecast to see the most substantial growth in ADR (+2.5 percent) and RevPAR (+2.9 percent). The lowest rate of RevPAR growth is projected in the upscale segment (+1.8 percent).
PwC Points to Stable Economy
After eight straight years of RevPAR growth, PwC’s forecast for 2018 anticipates that a stable economy and tax stimulus will help to support the highest occupancy level in the hospitality industry since 1981. The company forecasts occupancy to grow to 66.1 percent for U.S. hotels in 2018.
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Growth in demand continues to be the “tale of two travelers,” according to the research. The leisure transient segment will continue to drive roomnight demand. However, these travelers tend to be price sensitive and are more likely to shop around on price. While inbound international travel, which is an important source of leisure business, declined in the first and second quarters of 2017, researchers note that the weakening U.S. dollar could help to offset that decline moving forward. Finally, corporate transient travelers will continue to show slow demand growth, which has helped contribute to the slow ADR growth the industry has seen despite occupancy reaching new records.
Looking ahead to this year, PwC says that underlying macroeconomic and industry fundamentals are expected to stay strong. Supply growth is anticipated to reach the long-term average and increase to 2 percent. Demand growth, meanwhile, is projected to continue to support the record occupancy levels.
“Strength in consumer spending and the potential for an uptick in corporate transient demand are anticipated to drive a slight uptick in ADR growth compared to last year, ultimately resulting in the ninth straight year of RevPAR growth, approaching the record for the longest consecutive quarterly growth cycle in over 30 years,” the report reads.
JLL Sees Investor Confidence
Hotel investors are more confident about the hotel industry now than they were in late 2016, according to JLL’s North America Hotel Investor Sentiment Survey. The research collected more than 5,000 data points from hotel investors to measure expectations for 2018.
Arthur Adler, Americas chairman at JLL’s Hotels & Hospitality Group, attributed the confidence to strong RevPAR trends, a robust macro economy, a rising stock market and corporate confidence due to tax reform and other initiatives from the government.
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“In addition, hotels provide favorable strong risk-adjusted returns and a hedge against inflation,” Adler said in a news release.
Investors expressed a more confident outlook for three-quarters of the North American markets in the survey. The markets that received the most positive performance expectations include: Los Angeles; Washington, D.C.; San Francisco; Boston; Vancouver, Wash.; and Hawaii.