Takeaways from The Lodging Conference

H&LA Vice President, Laurel Keller, attended The Lodging Conference in Phoenix last week. Laurel had the following key takeaways from this year’s conference:

  • Demand continues to outpace supply: 2.2% US hotel supply growth forecasted for 2018, with 1.9% demand increase according to STR. Rate growth has slowed from 4% to 2% on a trailing 12-month basis over the past 36 months.
  • Modest RevPAR growth is expected to continue.
  • According to Lodging Econometrics, there are 608,837 rooms in the US pipeline.
  • Commercial Mortgage Backed Security (CMBS) loans for U.S. hotels increased in 2017, but are still beneath levels seen in 2014 and 2015, according to HVS. In the first three quarters of 2017, they saw a 2% decline in price per key and a 1% decline in total U.S. hotel sales volume.
  • Bernie Baumohl, chief global economist at The Economic Outlook Group, said his firm expects the economy to grow by 2% to 3% over the next two years, regardless of whether U.S. tax reform is passed. He expects short- and long-term interest rates to increase slowly, peaking at levels much lower than historical highs.
  • Architects were well represented at the conference. Many indicated that they are working mainly on renovation projects as opposed to new build developments, indicative of the current state of the real estate cycle.
  • Overall, the sentiment going into 2018 is cautiously upbeat among hotel lenders, brands, vendors, operators, and developers. Acquisition interest is increasing due to significant amounts of capital available to be deployed, and money is still cheap and fairly easy to source, continuing to fuel lodging development nationwide.

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