Skip to content

Search

Latest Stories

HVS: Hospitality growth in 2020 stable, but caution is urged

The overall U.S. economy continues growing, carrying with it the lodging industry

THE U.S. HOSPITALITY industry is likely to continue hitting its peak through 2020, though some economic uncertainty remains, according to a report from lodging consulting firm HVS. The report forecasts modest growth for RevPAR, occupancy and ADR as consumer spending remains relatively strong and despite the continuing growth of competition from the “sharing economy,” namely Airbnb.

“U.S. Lodging Industry: Stability in 2019 Extends Cautious Outlook into 2020-21” by HVS President for the Americas Rodney Clough and Managing Director and Senior Partner Daniel McCoy frames its predictions for the lodging industry with data on the overall economy. They conclude that the tepid growth the industry had seen by October would lead to a similar pattern in 2020.


“Sluggish economic growth should extend through 2020, supporting similar modest yet positive increases in revenue levels for the U.S. lodging industry,” Clough and McCoy said. “We expect occupancy and ADR to end near 66 percent and $131, respectively, in 2019, and we forecast occupancy to be between 65 percent and 66 percent in 2020, with an ADR gain between $1 and $2.”

The U.S. economy overall grew 1.9 percent in the third quarter of 2019, the report said, down from 2 percent the previous quarter but higher than the 1.6 percent forecast by a Wall Street Journal survey. Business investment dropped some, in part due to trade tensions between the U.S. and China, but consumer spending stayed relatively strong, according to the report, increasing 2.9 percent in the third quarter. Low unemployment and rising wages contributed to an economy that bolstered the hospitality industry.

Supply and demand for the industry remained fairly balanced, with a cautious approach by lenders toward proposed hotel projects and rising construction costs muting the growth of new supply despite lower interest rates.

“Although the overall pace of supply growth has been relatively modest, it has primarily been focused on major urban and suburban markets in the upper-midscale through upper-upscale market segments,” the report said. “As such, some individual market areas are experiencing saturation as supply growth has outpaced demand.”

At the same time, Clough and McCoy report that the number of “entire home” rooms available through stay-sharing sources like Airbnb rose 16 percent in 2019 to 6.2 million. “Entire home” rooms are considered my directly competitive with traditional hotels.

“This compares to 5.3 million available units in the traditional hotel sector,” they said. “Accordingly, the supply of shared accommodations now represents a volume greater than the available supply of traditional hotel rooms.”

However, the number of shared accommodation rooms considered active includes rooms that are rented only once a year, while hotel rooms are available 365 days a year. Growth in the shared accommodation market also has been impinged some by increasing regulation from local governments.

While the national outlook is stable, Clough and McCoy said individual markets will vary between robust growth and correction phases.

“Each market is subject to local dynamics affecting supply growth, demand generation, and expense levels that influence the outlook for hotel performance,” they said. “As such, it is important to consult with local market participants and experts in order to evaluate the performance outlook for an individual hotel market or assets.”

In November, CBRE Hotels Research also predicted slow but steady growth for the hospitality industry over the next two years.

More for you

AHLA members meet with U.S. lawmakers to discuss key hospitality legislation impacting hotel owners and workers

AHLA shares priorities with lawmakers

AHLA Members Unite on Capitol Hill to Advance Hospitality Legislation

MORE THAN 250 American Hotel & Lodging Association members met with lawmakers in the U.S. Senate and House to discuss legislative priorities critical to the hospitality industry. They raised concerns about tax and trade policies impacting hotel operating costs and travel demand amid ongoing budget reconciliation and tax negotiations.

Members also discussed expanding and upskilling the hospitality workforce through measures such as adjusting the H-2B visa cap and protecting the franchise model, which supports more than half of all U.S. hotels and 2.8 million jobs, the association said in a statement.

Keep ReadingShow less
CBRE: US Hotel RevPAR to Grow 1.3 Percent in 2025

CBRE: RevPAR to grow 1.3 percent in 2025

U.S. HOTEL REVPAR is expected to grow 1.3 percent in 2025, supported by urban markets from group and business travel and increased demand for drive-to and regional leisure destinations, according to CBRE. Occupancy is forecast to rise 14 basis points and ADR 1.2 percent year-over-year.

This represents slower growth than CBRE’s February forecast, which projected 2 percent RevPAR growth based on a 21-basis-point increase in occupancy and a 1.6 percent rise in ADR, the commercial real estate and investment firm said.

Keep ReadingShow less
Palette Hotels to Transform DoubleTree by Hilton in Washington, PA

Palette to manage Washington, PA, DoubleTree

Palette’s Expertise in Hospitality Management

SUNRISE GOLD HOSPITALITY recently selected Palette Hotels to manage its 140-room DoubleTree by Hilton Washington Meadow Lands Casino Area in Washington, Pennsylvania. Palette will oversee renovations, including Hilton Connected Rooms technology upgrades, new signage, landscaping, building systems and updates to the lobby, guestrooms, bathrooms, meeting spaces, restaurant, bar and lounge.

Sunrise Gold Hospitality is led by owner Ramesh Pandya, and Palette Hotels by Founder and CEO Richard Lou.

Keep ReadingShow less